I’ve tried to imagine life without the penny.
In many ways, I am already living it.
Earlier this week, I owed 72 cents for my Starbucks order and found myself mining the depths of my purse for a penny. I handed over three quarters and didn’t bother waiting for change.
This could become the norm if the recent presidential edict to stop minting new pennies comes to pass.
I’m no economist (though I do hold a degree in economics from Wharton), but the only downside I see to letting go of the penny is the nostalgia that must go with it.
What’s more interesting than President Donald Trump’s move to abolish the penny is that it wasn’t accompanied by an order to get rid of all cash. Instead, he prohibited any initiatives or plans for Central Bank Digital Currencies, analogous to a digital form of paper money for which the Federal Reserve holds liability.
Like most Americans, the majority of my purchases do not involve cash. Last year, only 16% of all transactions were cash-based as more businesses and individuals lean toward cashless exchanges.
Most of us learned of the penny’s demise via social media on Super Bowl Sunday. While it is unclear if any action can be taken against the penny without Congress signing off, it is clear that Congress, in its current composition, is content to play the role of spectator.
Debate over the penny has spanned decades, most recently in 2017 when the late Sen. John McCain, R-Ariz., introduced the COINS Act. In addition to pausing production of pennies for a decade, the bill also proposed modifying the metals that compose the nickel and shifting the $1 bill from paper to a metal coin. None of that worked out.
Congress hasn’t eliminated any currency from circulation since 1857, when representatives eliminated the half-cent. So, the penny has endured, even though the U.S. Mint lost $85 million last year to continue making those copper-plated zinc coins.
It cost 3.7 cents to make and distribute a penny last year. It also cost 13.8 cents to make a nickel, but for whatever reason, that coin hasn’t been targeted for destruction.
Despite producing those money-losing coins, the Mint made a mint —$100 million in profit last year.
If all goes according to plan, decades from now, payment for our thoughts will cost at least a nickel. We will give 5 cents instead of 2 cents when giving advice, and thrifty Americans will become nickel nippers instead of penny pinchers.
Some linguistic and social references to the penny will likely stick around even if the coin does not. I sang about a “ha’penny” every Christmas during the 1970s, and the half-cent had already been out of circulation for over 100 years.
Why have U.S. representatives been so reluctant to let go of pennies, especially since there are examples showing that the outcome isn’t so bad?
U.S. Military bases overseas got rid of pennies long ago, rounding purchases to the nearest 5 cents.
Our fellow North Americans eliminated the Canadian penny in 2012 without much controversy. Pennies were still valid currency, but purchases were rounded to the nearest 5 cents, and Canadians were encouraged to surrender unused pennies to the banks.
The U.S. has already decreased annual production of pennies and nickels to limited effect. The current administration is selling this latest crusade against pennies as part of the grand strategy to reduce government spending, but getting rid of pennies is just a lot of nickel and diming that won’t make a dent in the deficit.
Rather than sitting on the sidelines and watching pennies fall, I wish Congress would engage in a forward-thinking exchange about what could be on the horizon — a cashless society.
In 2022, the Federal Reserve took the first step in initiating public discussions about CBDC.
CBDC supporters say a digital dollar accessible to members of the public would offer an alternative to physical cash and perhaps more inclusive banking. Critics cite privacy issues of a CBDC and the impact on the banking industry.
According to the nonpartisan, nonprofit Atlantic Council, the U.S. is falling behind in the CBDC conversation.
Currently, 134 countries (98% of the global economy) are exploring digital versions of their currencies with programs in the advanced development, pilot or launch stage.
While we are busy debating the fate of currency from the past, other countries might be setting new standards for the currency of the future.
Read more on the Real Life blog (ajc.com/opinion/real-life-blog/), find Nedra on Facebook (facebook.com/AJCRealLifeColumn) and X (@nrhoneajc) or email her at nedra.rhone@ajc.com.
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