“A penny saved is a penny earned.”
WASHINGTON – The familiar words of Benjamin Franklin may not mean anything to Americans because the value of the penny simply isn’t what it used to be.
Canada recently stopped making its one-cent coin,as have Australia,Brazil and Finland.
That raises the question: Is it time for the United States to follow suit?
President Barack Obama was asked about it in his a Google+ hangout “fireside chat” Feb. 14.
“Any time we’re spending more money on something that people don’t actually use,that’s an example of something we should probably change,” Obama said.
This isn’t the first time the issue has come up. In 2001 and 2006,Jim Kolbe,then a Republican House member from Arizona,encouraged Congress to eliminate the penny.
He is confident that the penny will eventually become extinct.
“Americans will accept it once they understand what the cost of not accepting it is,” Kolbe said.
“People will probably save them and give them to grandkids. There’s already billions and billions in plastic jars everywhere. They won’t have any real value for at least a hundred years or more.”
Kolbe’s bill didn’t pass,but he said the chances are greater now.
“I don’t know that it’ll happen in this Congress or not,but I think the likelihood of it happening is greater than just a few years ago,” said Kolbe.
Another way to save money,Kolbe said,is to replace the dollar bill with a coin. The problem is that people aren’t ready to make that transition,he said.
The Treasury Department stopped making the unpopular presidential dollar coins for mass circulation in December 2011. It will mint enough for collectors. Still,the Federal Reserve Board reported amassing more than $1.4 billion in presidential dollar coins in storage as of May.
“Public acceptance of getting rid of the penny is higher than it is for the dollar,but the savings is higher for the dollar than it is for the penny,” Kolbe said.
Michael White,a spokesman for the U.S. Mint,said it costs 2 cents to make a penny,down from 2.4 cents in 2011. That’s because the Mint has cut back from three shifts of penny makers to two,he said. More than 6 billion pennies were made last year. The year before,nearly 5 billion were produced.
To determine the possible cost savings,multiply 5 billion by 2.4 (or 6 billion by 2 cents). That rough calculation finds that the government spent $120 million in 2011 and in 2012 to make pennies.
With issues such as the fiscal cliff,the sequester,gay marriage and other urgent business,the penny is not in the forefront of everyone’s mind on Capitol Hill.
“The penny is an example of something I need legislation for. Frankly,given all the big issues that we have to deal with day in and day out … we’re not able to get to it,” Obama said in his fireside chat.
There’s at least one person who wants to keep the penny around – Alan Popovsky,the owner of a restaurant in D.C. called Lincoln. Obama ate lunch there last summer with three campaign supporters who won a contest to meet him.
“I know they’re talking about eliminating the penny but,I don’t know – that seems so un-American to me,” Popovsky said. “It would tarnish – no pun intended – the legacy a little bit.”
Most of the floor at the popular restaurant a few blocks from the White House is paved in pennies – more than a million. (For the math challenged,that works out to $10,000 in coins glued to the floor.)
Popovsky said that he and designer Maggie O’Neill knew it would be expensive.
“The actual installation was more than it would be for a standard tile floor – three times as much,” he said.
Eliminating the penny would make the restaurant worth more,Popovsky said.
“I would like them to not get rid of the penny because we need them sometimes to repair the floor,” Popovsky joked.
“I try to get rid of them as fast as I can,” Kolbe said in a phone interview.
If the penny were eliminated,the country would likely model the change on Canada’s system. The coins remain in circulation,but the Canadian mint stopped making them last month.
For cash purchases,prices would be rounded to the nearest nickel. Debit card,credit card or check payments would be to the exact cent.
“When you go to the grocery store,if it’s $54.97 it will be rounded down to $54. 95. If it’s $54.98,it will be rounded up to $55,” Kolbe said.
There is one one-cent coin that’s worth quite a bit — a 1793 penny that sold for more than $1 million at an auction in Florida last year.
This story has been updated to correct a reference to the Canadian penny as a “loonie.” The loonie is the Canadian dollar coin.
Reach reporter Amy Slanchik at [email protected] or 202-326-9865. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire.