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President Barack Obama finally broke his silence on an issue of national importance Friday – he thinks it’s time to retire the penny.
The possible extinction of the one-cent coin was a featured economic question in a Google+ Hangout with the Commander in Chief last week as John Green, the co-creator of a popular YouTube channel, applied a little presidential peer pressure.
“Australia, Canada, New Zealand, many other countries have gotten rid of their pennies,” Green said. “Why haven’t we done it?”
“I gotta tell you, John, I don’t know,” Obama responded, adding, “Anytime we’re spending money on something people don’t actually use, that’s an example of things we should probably change.”
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But why should anyone care? They’re pennies. Aren’t there more valuable things to worry about?
First, pennies actually cost more to make than they’re worth. In 2012, every penny cost 2.41 cents to make – more than twice their face value.
And as zinc and copper – materials used in minting the penny – have become costlier due, in part, to manufacturing shifts in China, which are likely to raise costs further.
Granted, the total cost of minting pennies was only $58 million last year – less than one-tenth of a percent of total federal spending in 2012 – but groups like Citizens to Retire the U.S. Penny have long been making the economic case for getting rid of the penny (plus, the group adds, fishing for pennies adds about 2 seconds to each cash transaction per day).
And the U.S. military has already decided they’re essentially useless; all Army and Air Force Exchange Service stores on bases round all cash purchases up or down to the nearest nickel.
With both parties looking for ways to cut government spending, it seems as though cutting penny production could be a relatively painless, if insignificant, place to start. But in the Google+ Hangout, Obama ceded that Washington has bigger fiscal fish to fry.
“The penny is an example of something that I need legislation for,” he said. “And, frankly, given all of the big issues that we have to deal with day-in/day-out, a lot of times it just doesn't -- you know, we're not able to get to it.”
There have actually been efforts to pass penny-banning legislation. Back in 2001, then-Rep. Jim Kolbe (R-AZ) introduced the “Legal Tender Modernization Act,” which would have made pennies obsolete by requiring retailers to round up or down to the nearest nickel on cash purchases.
That bill failed, and Kolbe’s second attempt in 2006, the “Currency Overhaul for an Industrious Nation (COIN) Act,” after zinc costs nearly doubled, met a similar fate.
But the president doesn’t need Congress to explore other, cheaper alternatives to zinc – the main metal in pennies. In fact, the administration’s 2013 budget encourages the Treasury to “explore, analyze, and approve new, less-expensive metals for all circulating coins like aluminum, iron and lead.”
It wouldn’t be the first time Abe Lincoln’s coin got a makeover. Back in 1982, the penny changed from 95 percent copper and 5 percent zinc to 97.5 percent zinc and 2.5 percent copper.
(And lest so-called “penny hoarders” try to melt that valuable pre-1982 copper down, the Mint in 2006 prohibited the melting of pennies and nickels. It also made it a crime to carry more than $5 in one and five-cent coins out of the country).
Changes to the composition of pennies do have Congressional champions: Ohio Rep. Steve Stivers (R) introduced the “Cents and Sensibility Act” in December 2011, which would mandate that pennies were out of American steel (much of which comes from the Buckeye State) and dipped in copper.
But these efforts will be met with some serious resistance from the zinc lobby (yes, there is one). The company Jarden Zinc, which creates “metal and zinc coinage,” according to its website, paid lobbyist Mark Weller $340,000 in 2012 to discuss issues related to “minting/money/gold standard” with members of Congress and the Mint, according to the Center for Responsive Politics.
Weller also represents the pro-penny group Americans for Common Cents, whose website warns of the risk of inflation that eliminating the penny would bring, and whose headquarters are on K Street, known for its many D.C. lobbyist offices.
“Americans for Common Cents aims to inform and educate policymakers, consumers, and the media about the penny’s economic, cultural, and historical significance,” the group’s website reads.
The political power of the penny is likely another reason Obama hasn’t acted on getting rid of it. As far back as 2008, when he was still a candidate, the “penny lobby” appeared to mystify Obama.
Asked about it at a town hall in Pennsylvania, he said, “We have been trying to eliminate the penny for quite some time -- it always comes back,” joking, “I need to find out who is lobbying to keep the penny.”
This story was originally published on Tue Feb 19, 2013 2:51 PM EST
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Okay I get the penny costing more than its worth as being a reason to get rid of it, (1/10th or 1%) but isn't that throwing the baby out with the bath water. What I mean is can't we use an American metal to make the penny? Second the "rounding" to the nearest nickel.....Isn't it bad enough to watch gas prices go up a penny or two a day? I really don't know if I want to watch gas and groceries JUMP a nickel a day.
I would like to know too - how often the military rounds lower for our soldiers? Cause that ain't going to happen.
We need to look beyond the literal fiscal costs of minting the penny. The penny keeps inflation in check and is the cost of having a fair economy. The penny is a massive teaching tool for millions of children across the country who are doing penny drives for philanthropy and savings. Every child has access to a penny, and as children learn about their government through the symbolic value of the penny including character building actions of Abraham Lincoln, the penny unlike any other coin is a messenger of dreams and possibility! ~Elaina Redmond, Author The Power of the Penny thepowerofthepenny.com
please cite any references to these problems plaguing countries that got rid of their pennies?
It would seem that a lot of people didn't read the story very well. Obama was asked in an interview about his opinion on the cent, and he didn't even say it was on his agenda....at all! The only person cited in the article trying to dump the cent was Republican Rep. Kolbe (first in 2001, and again in 2006):
There have actually been efforts to pass penny-banning legislation. Back in 2001, then-Rep. Jim Kolbe (R-AZ) introduced the “Legal Tender Modernization Act,” which would have made pennies obsolete by requiring retailers to round up or down to the nearest nickel on cash purchases.
We can save money by not making pennies. Since a lot of people now are using cards and phone to pay with, I thing we should go farther and stop making all but two coins and three bills.
Stop making pennies, coins and bills with a 5 on it.
All we need is the Dime and the Dollar coins, and $10, $20 and $100 bills. Do we not have a lot of Dollar coins already minted?
Say, if we are buying food at Wal-Mart, paying with a card or phone would have no effect, but paying with cash, only the last Dime would be rounded off.
Wal-Mart could offer to round down the last Dime as a sales gimmick.
If the President would offer this, it would give the right wing something to vote NO on, that would save money.
Bottom line is it costs us more to make the penny then it's actual value.
Sounds like Obama and his expensive vacations.
This is hard for Republicans to fight against, to get rid of a little brown thing that is worth nothing!
Seriously though, the sensible thing (financially) would be to eliminate the penny and the dollar bill simultaneously and force the usage of a dollar coin.
vanman.....the dollar coin already exists..it has been a flop both times
they cant do that how will they cash pay role checks on all these new jobs that the government and china created
More proof Obama wants to eleminate the 1%.
I really don't give a damn what the argument is for getting rid of the penny, but I'd rather spend 2 more seconds in a check-out line than give the government 4 more cents in a tax. When will it end? Every dang day there's another tax or fee of some kind. When are we oing to stop giving money to othr countries? I believe if we stopped that practice, we might not have a deficit and we might be ble to have "Obama-care" without bankrupting the American family and local business. Why the hell should we fund other countries? What has it ever bought for us? So, I'm for keeping the penny; YOU HAVE MUCH MORE IMPORTANT THINGS TO DO THAN WASTE ONE MORE MINUTE ON THIS.! And that includes all you proponents of such an idea.
it's time to move away from status quo. there is not a single country in the world that argues against getting rid of their pennies..... when it's suggested, they welcome it, because they're for a change that is the better, pun intended.
Then how can anyone explain Obama?
I'm guessing it would cost the average middle income family around $50 a year (50 purchases a week). You know retailers aren't going to round their prices down.
More proof Obama wants to eliminate the 1%.
Why can't they make the penny out of a less expensive material.
If it's only worth a penny then the quality of the coin does not need to be so high.
then you'd break them more easily and you'll have to re-mint more of it every year.... it's a losing proposition.
Yus
PLASTIC
This suggestion may be the worst thing he does. If you eliminate the penny your are eliminating the lowest common denominator of our monetary system. Prices will rise in 5 cent increments. Gas will rise in 5 cent increments each time there is a hike. Inflation will automatically go up 5 cents with the elimination of the penny. Sales tax will rise. As if that idiot hasn't ruined the economy enough and by passed the Constitution he wants to change our monetary system. The man isn't smart enough to figure that out Instead let's get rid of the $100 bill. Just think of the inconvenience of transporting drug money. It will take twice the space to hide it. While you are at it get rid of the $50. Then it will take five times the space to hid your illegal money. Such a change wouldn't affect most of us since we use debit cards and not cash. They want to make dollar coins so they last longer. I think like pennies the dollar coin will be put in jars and not used. At least not by men. "Men don't carry change". Know why? We have to empty out our pockets at night or the women complain the money goes through the wash. The women never empty their pocket book. The only men who have change first thing in the morning are the ones that carry the little coin purses. You have already put the gold dollar in circulation. How is it "circulating"? Our monetary system has worked fine for 250 years leave it to a Black democratic president to want to change it and leave his mark from now on. Of course the people on welfare lose buying power as well.
that is not true.... as a practical matter, everything will remain the same. not even your paycheck is getting rounded anywhere. only when you're paying with coins at the register with that "ding" sound will the rounding be implemented. in effect, it's like leaving your penny behind for the cashier. Heck, if you're paying by credit card, nobody will round a single digit, perhaps even add more decimals to the cents.
even today i always drop the pennies I get in my cash transaction into the tip jar or the donation box. ain't carrying those dirty little dinkers in my pocket sorry.
wade...you've waded past your brain
Ok, just stop making them. Keep in circulation what is already out there. We have plenty. if we start running out just make a special batch. You can put Obama on one side and then a hand flippin the bird on the other side. With "In Nothing We Trust" etched into edge.
So how do you give someone $1.01. Congress is also useless and costing us more than they are worth. We could probably save more by getting rid of congress.
but then we end up with the Senate and Obama which is worth even less.
oooo a penny for your thoughts barry.....
this guy wil promise anything......how's your buddy tiger...what a team...a tiger and a pussy
If you eliminate the penny - then it's goig to be necessary for states and local municipalities to change their retai tax structure so the consumer don't have their purchases rounded up to the nickle.
How about we retire El Presidente Obama instead, the penny is worth more.
"requiring retailers to round up or down to the nearest nickel on cash purchases". A retailer round down? LOL! Good one!
If the penny cost more then it's worth what about congress and Obama. I agree with getting rid of the penny if we also replace both houses and Obama. With the overrun on most government contracts the penny is a non issue.
Can't we keep the penny and retire Obama?
First off the Steel idea with a copper dip sounds great. If the penny is elimnated who is going to gain every time your change is 2 Cents or 7 cents ETC.
Secondly the reason nothing is getting done in comgress is because of the HOR & the GOP not the Senate, anyone who truly doesn't see that is just ignorant!
Obama has out lived his usefulness.
Its just another way to rip off the public. If prices are rounded up because we don't have pennies then we end up paying more and this wont stop the gov from making nickles out of cheaper metal ie inflating the cost by making nickles not worth 5 cents. Its all a scam devaluing our currency and the rich love it. They wont be hurt by these monetary policies infact they will make more money than before because they will be in a position to take advantage of this devaluation. Its the normal people on a fixed income or salary that will see their standard of living and savings fall into the basement. Good bye middle class hello lower class! All of this has happened when the democrats and repubs stopped making silver coins in 1964 and when Nixon cancelled the gold standard and introduced the fiat currency in 1972. Our currency is only going to be worth less and less until the Weimer Republic looks like a paradise. Then you see what happens the government will retire the green back and introduce a new currency just like the Mexicans did in the 1990's. What a paper scam. We need to get back to inherent value which wont be effected by interest rates and currency speculators. Silver would be my guess with gold as a secondary currency.
Anything this man wants I am against. The penny controversy u can't be serious, with all our problems, he will do anything to take the heat off the real problems, 1 way is just to eliminate the problem is get rid of him., send him home to his community organizers that is all he is good for !