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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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I am sorry he golfs and vacations well too !
Just like the Kennedy Half that is minted by the millions at both P & D, plus the clad and silver proofs. For collectors only - cronies of the US MINT. Cronies who buy the minimum quantities, then resell at "retail." Banks will also order them for their cronies.
So goes the Lincoln Cent.
For those of you talking about a third term for Obama: A third term presupposes that Obama ushers in a new and prosperous US of A. I sincerely doubt that Obama has the wherewithall to make it so. Or that he even wants to see a new and posperous America!
Anything to insult Obama.
If you voted for G. W. Busch you have no room to insult anyone.
Voting for Busch 2 times that was real intelligent.
I bet your still mad because Clinton lied about sex.
I am still mad because Busch lied about Iraq and destroyed the economy.
Stupid comment. Stupid. Obama IS an insult to this country. Why do you not know that???
Barry, if you are going to talk bad about a president, at least spell the name right. Obama went to bed while our ambassador and friends were being murdered, are you made about that too.
If the dollar can be made out of paper and ink then why not just make the penny out of cheaper material perhaps plastic? It is not like money is based on gold standard any more. All money can be made out of paper or plastic. What do they think credit cards are.
You just know that if they eliminated the physical penny it will be just the excuse to round up the cost of everything to the nearest 5 cent increment. Even things that are bought with a credit card which is not physcial money based.... And so consumer gets screwed again.
keep the penny get rid of oboma
Keep the penny, get rid of odumbo
Let's keep the penny and dump obama!
your all full of @!$%#!!! if obama had said keep the pennie alive i wonder what the @!$%# you @!$%#en morans would have said.........
Eliminate Obama, real change & real savings.
why discard the penny? Just have the banks and crdit unions , buy the pennies from hoarders. Put a minimum amount of pennies to be turned in, to collect a bonus for doing so . For example . if an individual sells $100.00 worth of pennis ; give them an additional $25.00 and a receipted copy of the transaction . The bank could also receive a fee for the transaction . Perhaps 15 to 15% .The government , would have $241.00in coins back in circulation . with net savins of $141.00 .A firm time limit ,my be needed for this ,but iit might solve the penny problem for a while . KGK
So exactly what happens to all the pennies that people have saved up I guess you better trade it in now? Who knows what will happen with King Obama? :) Hail to King Obama :)
Let me understand this plan. If something has a 6% tax on it, without the penny it would increase to 10%?
Oh, yeah, I really be in favor of that.
Of course if states and the feds lowered the tax rate to 5% I'd be willing to talk about it. Talk about a snowballs chance in Hell.
Retire Obama... Keep the penny it is worth more.
I'll be all for retiring the penny when every sales tax is also retired. When that happens there really won't be any need for the penny. Until that happens you will always need pennies.
What we need to do is give a penny salary to congress. The penny is iconic. Leave it alone. If it can't be afforded then congress can pay for it out of their salaries by reducing them. When they start acting like a congress and helping the american people and not the cooperations then they can be paid. Till then, like those who don't perform they are fired.
It would be far, far better if OBAMA retired. End of story.
Obama must be desperate. He's looking for things he can change before he gets booted out of office for all his lies. He's been indicted legally and with any hope at all he'll be out of office before this 1st year is up. Why is it that democrats don't think they have to follow the rules??? Whether you find them on 1600 Pennsylvania Ave. or the hood its all the same.
The government should take the pennies from the sale of goods and services and put it toward deficit reduction. For instance, if you buy something that comes out to $5.01, .02, 03, 04, then the pennies that do not round to the nearest nickel goes toward reducing the deficit. This would be one way for everyone to help reduce the deficit and a law should be enacted that it can't go toward anything else.
Strange. One penny is more than the Federal Government has in the bank, so to speak.
Keep the Penny. Retire Obama.
I did not read this article because it is a non-issue. Obama is really having a good laugh as he has come up with another trivial idea and people have really turned it into a discussion. C'MON PEOPLE.
Nobody is going to round down to the lower 5 cent. We have had a monetary system based on 100 units since the revolution. Obama can't simply decide that we change our entire monetary system.Sales tax will increase, gas will go up 5 cents instead of one cent. Gas that is $3.76 cents will go to $3.80 Gas tax that is .175 will go to .20. No one will use the new dollar coin. They have been out in circulation and how are they circulating? They last longer than paper money because no one is using them. Like the penny they are being tossed on the dresser at the end of the day and not picked up the next morning. I do that and at the end of the month I might use them.I don't care if you make the penny out of plastic we need the ability to make change. The military is a captive society and they can do whatever they want on base. The general public is different and we want the penny. If those morons who want to get rid of it will just pay the additional 4 cents every time they buy something they won't have to deal with the penny. I'll take $1.70 for a $1.66 item. That is a personal preference they have.Nobody says they can't "tip" 4 cent on everything they buy.
My main concern with dropping the penny has more to do with sales tax that most places have. When they can't ask for a penny they will have to ask for a nickle. Here in Juneau,AK quite often the city asks for a temporary tax and they usually get it but it's a penny not a nickle. Right now sales tax is at five cents and in a few years it will go down or we might be asked to renew it or add another. If they can only add a nickle at a time it could start climbing up, ten cents, 15 cents and on up. There are a lot of towns and states with sales tax think about.
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