In a move to modernize currency management and reduce governmental expenditure, a bipartisan group of U.S. representatives has introduced the Common Cents Act. Introduced on April 30, this legislation aims to discontinue the minting of pennies, a decision driven by economic considerations and the shifting landscape of cash transactions.

Overview of the Common Cents Act

The proposed legislation will ensure that cash transactions are rounded to the nearest five cents, though it will leave non-cash payments—such as those made via credit cards, debit cards, and checks—unaffected. The aim is to streamline transactions and enhance operational efficiency within the economy.

If enacted, the bill will come into force one year after it is signed into law.

Arguments for Change

Representatives Lisa McClain (R-Mich.) and Robert Garcia (D-Calif.) have endorsed this initiative, citing successful precedents in countries like Australia and Canada, where the elimination of the one-cent coin has simplified commerce. They note that the penny’s production is a drain on taxpayer funds, asserting that halting its production would enhance efficiency and cut unnecessary costs.

Economic Implications

Recent financial reports from the U.S. Mint underline the economic rationale behind the bill. In the fiscal year 2024, it was reported that the Mint incurred a loss of $85.3 million associated with the production of approximately 3.2 billion pennies. Furthermore, for the 19th consecutive year, the cost of minting a penny exceeded its face value, with production costs approaching four cents per coin.

For comparative context, the Mint also reported similar losses on higher denomination coins, such as nickels, which cost nearly 14 cents to produce.

The Bigger Picture

This latest legislative effort follows a previous directive from former President Donald Trump, who suggested discontinuing penny production due to rising manufacturing costs. However, the authority to eliminate particular coinage lies within congressional jurisdiction, not the executive branch.

Historical Context

This isn’t the first occasion the U.S. has moved away from its least valuable coins. The half-cent piece was abolished by Congress back in 1857, a decision that mirrored ongoing debates about currency efficiency and cost-effectiveness.