Legislation

In 2002, United States Representative Jim Kolbe (R-AZ) introduced the Legal Tender Modernization Act and in 2006 he introduced the Currency Overhaul for an Industrious Nation (COIN) Act.[1] Both bills failed to advance in the house and died when Congress adjourned.[2]

Arguments for elimination

Production at a loss — As of February 2011, it costs about 2.4 cents to mint a penny.[3] In 2007, even the price of the raw materials it is made of exceeded the face value, so there was a risk that coins were illegally melted down for raw materials.[4]

Lost productivity and opportunity cost of use — With the average wage in the U.S. being about $17 per hour in 2011,[5] it takes about two seconds to earn one cent. Thus, it is not worthwhile for most people to deal with a penny. If it takes only two seconds extra for each transaction that uses a penny, the cost of time wasted in the U.S. is about $3.65 per person annually,[6] about $1 billion for all America.[7] Using a different calculation, economist Robert Whaples estimates a $300 million annual loss.[8]

Limited utility — Pennies are not accepted by all vending machines or many toll booths, and pennies are generally not accepted in bulk; however, Illinois does accept pennies in its toll booths.[9] In addition, people often do not use cents to pay at all; they may simply use larger denominations and get pennies in return.[citation needed] Pennies end up sitting in jars or are thrown away and are not in circulation. Economist Greg Mankiw says that "The purpose of the monetary system is to facilitate exchange, but... the penny no longer serves that purpose." [10]

Prices would not be higher — Research by Robert Whaples, an economics professor at Wake Forest University, using data on nearly 200,000 transactions from a multi-state convenience store chain shows that rounding would have virtually no effect. Consumers would gain a tiny amount – about 38⁄1520 (1⁄40) of a cent per transaction.[11]

Historical precedents — There has never been a coin in circulation in the U.S. worth as little as the penny is worth today. Due to monetary inflation, as of 2007, a nickel is worth approximately what a penny was worth in 1972.[12] When the United States discontinued the half-cent coin in 1857, it had a 2008-equivalent buying power of 11 cents.[13] After 1857, the new smallest coin was the cent, which had a 2008-equivalent buying power of 26 cents. The nickel fell below that value in 1974; the dime (at 10 cents) fell below that value in 1980;[12] the quarter (at 25 cents) fell below that value in 2007.[13]

Hazards — The reduced-cost clad zinc penny, which has been produced since mid-1982, holds additional dangers when swallowed by children and others, unlike all previous U.S. coins. If the copper plating is breached, the penny quickly corrodes into a sharp-edged object, which is more likely to lodge in the digestive tract. Injury is more likely and furthermore, zinc and copper digested from the lodged pennies may be toxic. An 11 lb (5-kilogram) dog was fatally poisoned by swallowing two pennies.[14]

Arguments for preservation

Charity — Some organizations raise donations in change jars, predominantly in pennies.[15]

Historical sentiment — The cent was one of the first coins authorized to be minted by the American government and the first to be put into production.

Presidential history — Many admire Lincoln as a president and in addition to the 5-dollar bill, the penny bestows an honor on Lincoln. This is especially pronounced in Lincoln's home state, Illinois.[16]

Deflationary effects — Some have argued that because inflation raises production costs of the penny to exceed its value, this imposes limits on the amount of inflation that can be caused by central banks.[17][dubiousdiscuss]

Other options

Economist François R. Velde has suggested an alternative plan in which the government would make the penny worth five cents. This change would cause minor monetary inflation of $5.6 billion.[18]

On February 28, 2008, Rep. Zack Space (D-OH) introduced H.R. 5512, the Coin Modernization and Taxpayer Savings Act of 2008. If enacted into law, the act would result in the penny being made primarily of steel and treated to have a copper color within 270 days of enactment unless the Secretary of the Treasury can come up with a new element for coin composition that, when added to zinc and copper will lower the price of manufacture to under one cent. According to the act: "Given the current cost to make a penny and volume of pennies minted, simply reducing penny production costs to face value, the United States will save more than $500,000,000 in the next ten years alone." After committee hearings, the House passed the bill on May 8, 2008 by voice vote. However, the bill died in committee in the United States Senate.[19][20]

Precedents in other countries

Many countries outside the United States have chosen to remove low-value coins from circulation:

Canada has minted a one-cent coin of similar size and color as its American counterpart, with steel as the interior metal instead of zinc, though composition was near identical to U.S. cents prior to 2000; so it circulates at par in small quantities in the United States. However, on March 29, 2012, the Canadian government announced that it will eliminate the penny from the coinage system.[21]

The Philippines under US territorial administration removed their half-centavo coins from circulation in 1904 due to public rejection of such a small denomination, though introduced only the year before. The Philippine half centavo continued as a proof-only coin until 1908, and a small run of aluminum half-centavo coins was privately struck in 1913 for the Culion Leper colony, but not circulated. In contrast to that however, the Philippine hundredth of a peso denomination (one sentimo) continues to exist as a circulated coin as of 2011 despite a record low value of $0.00024.

Sweden removed the one- and two-öre coins from circulation in 1972, by 1991 had eliminated the five, ten, and 25-öre coins, and in 2010 also eliminated the 50-öre coin. Similarly, the Norwegian krone and Danish krone have both eliminated all coins worth less than 50 øre.

The decimal British half penny (£0.005) was first issued in 1971. Being worth 1.2 pre-decimal pence, it enabled the prices of some low-value items to be more accurately translated to the new decimal currency. Inflation over the ensuing 13 years led to the coin being withdrawn from circulation in December 1984.[22]

New Zealand eliminated one- and two-cent coins of the New Zealand dollar in April 1990, and the five-cent coin in October 2006.[23] Prior to decimalization on 10 July 1967, there were two coins smaller than the decimal cent that were eliminated during the changeover – the halfpenny (5⁄12 cent), and the penny (10⁄12 cent)

Mexico's New Peso transition in 1993 made the five-cent coin the smallest denomination of the new currency (the name was reverted to Mexican peso in 1996). In 2009, new coins were minted for ten and twenty cents.[24]

Australia eliminated the one-cent and two-cent coins of their dollar in 1992.[25]

The Hong Kong government ceased producing the Hong Kong five-cent coin in 1980 and they were quickly recalled from circulation.[26]

Bank Negara Malaysia implemented a rounding mechanism on 1 April 2008 in order to round total bills to the nearest 0.05 ringgit, which made the 1 sen (0.01 ringgit) coin irrelevant to normal circulation.[27]

Israel eliminated the one agora coin in April 1991[28] and the five-agorot coin in January 2008.[29]

The Netherlands eliminated the one cent of the guilder in 1980 and ceased issuing the one and two cents of Dutch euro coins in 2006. In Finland, the one and two cent of Finnish euro coins are only being minted for collectors and are not in general usage.

On March 1, 2008, Hungary eliminated the one and two forint coins and rounded everything to the nearest five forint.[30]

In 2005, Brazil stopped issuing one-cent Brazilian Real coins.[31]

In 2001, Argentina stopped issuing one-cent Argentine Peso coins.[citation needed]

Since 1978, India has in phases eliminated out of circulation 1 paisa (1⁄100 of a rupee), 2 paise, 3 paise, 5 paise, 10 paise, 20 paise, and 25 paise coins.

Papua New Guinea eliminated their two smallest denominations, the copper one and two Toea coins, with both coins ceasing to be legal tender in April 2007.[32]

At U.S. Military bases overseas, AAFES round up/down to nearest 5 cent denomination.[33]

Singapore no longer issues one-cent coins since April 2002.[34]

However, many nations still use coins of similar or smaller value to the US cent. In some cases, while the nominal value of the coin may be smaller than that of a US cent, the purchasing power may be higher:

Russia still issues five-, ten-, and fifty-kopek coins, despite their value being approximately equivalent to $0.002, $0.003, and $0.02, respectively, in U.S. dollars. The issue of one-kopek coins was stopped in 2010.[35]

Neighboring Ukraine still issues and uses all kopek coins, even the 1 kopek dating from when its hryvnia was worth more. One kopeck is equivalent to $0.00125 (one-eighth of a U.S. cent).

Republic of Korea stopped minting of 1-won and 5-won coins, but 10-won coins are still minted with changing composition.

The East Caribbean Dollar Board, the Bahamas, Barbados, Bermuda, Cayman Islands, and Belize all issue one-cent coins.

The Solomon Islands, South Africa (1c and 2c were stopped in 2002[36][37]) and Namibia all issue five cent coins valued approximately at or below US $0.01.

The Eurozone (except for Finland and the Netherlands) uses 1- and 2-cent coins. As posted prices generally include taxes, it is possible (but not standard) for vendors to round prices to the nearest five cents and eliminate the need for smaller-value coins. In Finland and the Netherlands, all prices are rounded to the nearest five cents.[38]

Japan continues to mint the 1 yen coin, and it is in regular usage.

Peru's Nuevo Sol still maintains production of 1-cent and 5-cent coins. The 1-cent coin is worth USD 0.0035 US. Much like the American coin, they are only occasionally given out at supermarkets as change and are never used in public. Most supermarkets offer the option of donating the cents instead of receiving the change. This saves time and most people opt for a donation to charity.

Panama still issues a 1-centisimo coin, which is identical in size, composition and value to the U.S. cent, and circulates alongside it.

Ecuador still issues a 1-centavo coin, and like Panama, the coin is mostly identical in composition to a U.S. cent, is equivalent in value, and also circulates alongside it.

Laws regarding melting and export

On April 17, 2007, a Department of the Treasury regulation went into effect prohibiting the treatment, melting, or mass export of pennies and nickels. Exceptions were allowed for numismatists, jewelry makers, and normal tourism demands.[39] The reason given was that the price of copper was rising to the point where these coins could be melted for their metal content.[40] In 1969, a similar law regarding silver coinage was repealed. Because their silver content frequently exceeds collector value, silver coins are often sold by multiplying their "face value" times a benchmark price that floats relative to the spot silver price per ounce.[41]

I thank my opponent in advance for accepting this debate. There will be three rounds of debate with establishing arguments, rebuttals, and final focuses. If definitions are needed for American penny or circulation, I would be happy to provide them.

In recent years, there has been much discussion concerning the necessity of the penny. Many argue that the penny is, "outdated, worthless, bothersome, and wasteful" (1). They claim that the penny should be banned. Others contend that the penny is an important national symbol (2). However, since the penny is obsolete, financially wasteful, and practically valueless, it should be abolished.

First, pennies are becoming increasingly obsolete. People simply do not use them anymore. In fact, though the U.S. mint produces a billion pennies a month, some sources claim that two-thirds of them immediately drop out of circulation (3). In addition, twenty-seven percent of Americans do not even keep track of their lose change (1). If Americans no longer use the penny, it is unnecessary to have it. Personally, I never use pennies at all. It is much easier to just throw them away than to try to keep up with them in a pocket or wallet. I'm sure that I have thrown far more pennies into fountains than used to purchase goods. It would be easier for everyone to go about their lives without dealing with this obsolete coinage.

Secondly, pennies cause financial waste. Though people do waste some money by disposing of pennies in the trash, the nation is facing an even greater problem. Pennies actually cost more to produce than they are worth. It costs 1.23 cents to make a one cent penny. This may not seem like much, but when the nation finances the production of billions of pennies a year, it is a recipe for financial ruin. However, the problem does not end there. Estimates show that penny transactions waste four hours per person, per year. Considering that these four hours could be better spent working, pennies are responsible for a national deficit of over fifteen billion dollars a year (1). Since the production and transactions of pennies are financially wasteful, we should ban it as a form of currency.

Lastly, pennies are now practically valueless. The things our grandparents purchased for a cent cost much more today. William Safire of the New York Times writes that, "…it takes nearly a dime today to buy what a penny bought back in 1950" (3). This certainly comes full circle to the fact that people throw pennies out. They do so because the coin is worthless. No one keeps fifty small coins around when they could just carry two shiny quarters. On a larger and more significant scale, pennies are often worthless in international business. The United States is one of the last industrialized nations to maintain their low-denomination coin (3).This makes it difficult to trade with other nations. In the interest of pleasing both American citizens and our foreign neighbors, the penny should be dropped from circulation as soon as possible.

Some still make arguments for the penny. One man who saved them for thirty-eight years ended up with $13,084.59 (1). Mark Lewis of Forbes.com points out that states like Tennessee who have high productions of materials that make pennies are still in favor of the coin (4). More convincing still, anyone can see the long history the penny has enjoyed in our country just by looking at it (5). However, the facts still stand. Not many Americans are willing to save all their pennies for thirty-eight years. States like Tennessee do not rely on the penny for their economic revenue, and eliminating the penny would eliminate a great deal of environmentally destructive mining in such states. Though the penny enjoys a long history, such history belongs in a museum. The detriments to the penny outweigh its benefits. Americans must do what's best for other Americans. Since the penny is obsolete, financially harmful, and valueless, it must be eliminated from our currency.

What would be the point of getting rid of the penny? The penny is the basis of all money. Getting rid of the penny would be completely pointless, so why should it be taken out of circulation.

The penny has been being used for hundreds of years without any problems. A lot of people say that pennies aren't really worth anything. But, obviously, in reality they are worth something. Everything can come down to pennies if you want it to. A dollar, 100 pennies. 10 dollars, 1,000 pennies, and so on and so forth.

Getting rid of the penny would throw of our money system. Prices of goods would have to increase or decrease by at least 5 cents every time a price was lowered or raised because a Nickel would be the next smallest coin. You could say "Goodbye" to $1.99 sales or something for $98.97.

Another major issue, taxes on items you buy at the store. Even a $2.00 item, which would seem easy enough to pay without pennies, would become impossible to pay due to the taxes on the item.

So yes, lets get rid of the penny and lose the basis of all our money, say "goodbye" to easy savings and easy financial transactions; sounds like a smart idea, huh? While we're at it, why not get rid of anything less than a dollar! Yeah, that wouldn't make much sense either.