Time for the penny to be retired

Pasadena Star News

By: Cynthia Kurtz

Posted 2/13/2013

I think it is time to retire the penny. Much to my surprise, this is a hotly contested issue so I should be clear that this is not the position of the San Gabriel Valley Economic Partnership. The Partnership has no official position on the penny. This is my position and I am ready to defend it.

I don't hate the penny. I have a penny jar that gets turned in for a few bucks every so often. I still pick up pennies when I see them on the street...just in case they do bring good luck. It's not that pennies make my wallet too heavy although after I put them in the penny jar I do notice a significant weight difference with no appreciable difference in purchasing power. 

My opposition to the penny is based on dollars and cents - making a shiny new penny costs 2.4 cents. That's right; a penny can't buy a penny. In 2011 the U.S. Mint made five billion pennies - a total of $50 million in currency. To make that $50 million the taxpayer has to come up with $120 million. This is not how we should spend our tax money when we are talking about cutting things like school lunch programs and military pay. 

It reminds me of two friends, Bob and Jean, who meet on the street. Bob asks Jean "How is business?" Jean responds, "I'm losing a dollar on every widget I sell." Bob replies, "That is terrible, how do you make up the difference?" Jean responds, "Volume."    

Government can't always operate like a business but there are basic principles of business and economics that do apply. Paying more than something is worth isn't sustainable for either the public or the private sector. 

Still there is organized opposition to retiring the penny. Opponents fear that businesses will have an incentive to round up causing prices to increase. Experience provides the best response. There was a U.S. 1/2 cent coin until 1857. It was eliminated without inflationary impacts. Coins have been phased out in the U.K., New Zealand, and Australia without dire economic effects.

Some penny fans are opposed to its demise because the penny honors Abraham Lincoln. May I remind those of you with this sentiment that our 16th President is also on the five dollar bill. Abe deserves more than a wasteful penny.

Others cite its historical significance and claim it is unpatriotic to get rid of the penny. The Department of Defense stopped using pennies on overseas military bases 30 years ago because it was too expensive to ship them. They didn't think it was unpatriotic.

One of the leading opponents to getting rid of the penny is the company which provides the zinc blanks to the U.S. Mint for pressing pennies. I understand this could be a serious setback for their business model but with the demand for metals increasing around the world and the price of zinc having doubled in the last five years, there will be other outlets for their zinc products.

There is one augment against getting rid of the penny that does make "sense" to me.  Without pennies we would have to make more nickels and it costs almost a dime to make a nickel. I have a solution for that problem as well, but it may be best to just take on one coin at a time.