Write an essay in which you argue whether we should or should not abolish the penny

Professor Majsak

Final Exam:

Should We Abolish the Penny?

Write an essay in which you argue whether we should or should not abolish the penny. Use information from at least 4 of the sources and use proper MLA formatting. Be sure to include a counterargument.

Lewis, Mark. “Ban the Penny.” Forbes.com 5 July 2002. 8 February 2006.

Almost a year has passed now since U.S. Rep. Jim Kolbe made headlines by introducing his anti-penny bill, yet these pesky one-cent coins continue to jingle uselessly in people’s pockets. Can nobody rid America of this copper-coated scourge? Kolbe, an Arizona Republican, is doing his best, although his proposed Legal Tender Modernization Act is languishing in a subcommittee. The bill would not ban pennies, but merely discourage their use by establishing a system under which cash transactions would be rounded up or down. That would render the penny unnecessary. “It’s practically useless in everyday life,” complains Neena Moorjani, Kolbe’s press secretary.

But the penny has its fans, especially in Tennessee, which is rich in zinc. Up until 1982, pennies were made mostly of copper; since then they have been 97.5% zinc, with a little copper mixed in for appearance’s sake. Just last week, two lawmakers from the Volunteer State introduced a resolution commemorating the 20th anniversary of the zinc-based penny. Fans of this coin note snidely that Kolbe’s home state of Arizona is rich in copper—which makes up a bigger percentage of the larger-denomination coins that might be more heavily used if the penny were discontinued. Kolbe also favors replacing paper dollar bills with longer-lasting $1 coins— and as it happens, the Sacagawea “golden dollar” introduced two years ago is made mostly of copper. . .

Kahn, Ric. “Penny Pinchers.” Globe.com 9 October 2005. 10 February 2006.

Pity the poor penny.

Once, it had swagger. With a pedigree dating back to 1787, it was feted as the first currency authorized by the United States. As a money symbol, it was deemed as rock-solid as the presidential jaw of Abraham Lincoln, which first appeared on it in 1909. Boston’s own Paul Revere, resident silversmith, supplied some of the copper for those bygone pennies. Now, everywhere you turn around town, the zinc-and-copper one-cent piece is taking it on the chin: Shoved out of the economic picture by charge cards. Flung into the trash by people who think it’s mucky and worthless. Hijacked by cashiers who assume you’re among the 27 percent of Americans who don’t even keep track of their loose change, according to a May 2005 survey conducted by Coinstar, providers of the self-service machines that help convert coins into paper money. . . . On the Internet, you were introduced to a group called “Citizens for Retiring the Penny,” which advocates rounding off prices to the nearest nickel, as have some members of Congress. The group was founded by a 1999 MIT graduate named Jeff Gore. “The point of currency is to facilitate transactions,” Gore, 27, told you by phone. “People fishing in their pockets. The cashier has to open a new bag of pennies. For me, it’s the waste of time I object to.” Gore is a busy guy. As a graduate student in physics at the University of California at Berkeley, he has tackled topics such as “Single Molecule Investigations of the Mechanochemical Cycle of DNA Gyrase.” However, Gore did find the time to come up with this calculation, posed on the group’s website: “The National Association of Convenience Stores and Walgreens drug store chain estimated that handling pennies adds 2 to 2.5 seconds to each cash transaction (remember that we are including the occasional customer who spends 30 seconds looking for the penny in his pocket). Let us estimate that each person goes through three of these transactions per day and that on average there is one person waiting in line (making for a total of three people’s time wasted in each transaction). We can then calculate that the presence of pennies wastes (3 transactions/day) × (2.25 seconds/transaction) × (3 people per transaction) = 20 seconds per day. Probably only about half of the wasted time is directly connected with a cash transaction, giving a total of 40 wasted seconds per day per person. This may not seem like a lot, but it translates to 40 × 365 / 3600 = 4 hours per person per year. If each person’s time is worth $15/hour then we arrive at the conclusion that each person is losing $60 per year, at a cost to the nation of over $15 billion per year.

On the other side of the coin, Edmond Knowles figures he has saved an average of about 90 pennies a day for the last 38 years: On his counter, in jugs, and finally in 55-gallon drums in his garage. In June, an armored car picked up his 4.5 tons of spare change, and had it recycled through Coinstar. That would be 1,308,459 pennies, or $13,084.59. . . .

Safire, William. “Abolish the Penny.” nytimes.com 2 June 2004.

The time has come to abolish the outdated, almost worthless, bothersome and wasteful penny. Even President Lincoln, who distrusted the notion of paper money because he thought he would have to sign each greenback, would be ashamed to have his face on this specious species. That’s because you can’t buy anything with a penny any more. Penny candy? Not for sale at the five-and-dime (which is now a “dollar store”). Penny-ante poker? Pass the buck. Any vending machine? Put a penny in and it will sound an alarm. There is no escaping economic history: it takes nearly a dime today to buy what a penny bought back in 1950. Despite this, the U.S. Mint keeps churning out a billion pennies a month. Where do they go? Two-thirds of them immediately drop out of circulation, into piggy banks or—as The Times’s John Tierney noted five years ago—behind chair cushions or at the back of sock drawers next to your old tin-foil ball. Quarters and dimes circulate; pennies disappear because they are literally more trouble than they are worth. The remaining 300 million or so—that’s 10 million shiny new useless items punched out every day by government workers who could be more usefully employed tracking counterfeiters—go toward driving retailers crazy. They cost more in employee-hours—to wait for buyers to fish them out, then to count, pack up and take them to the bank —than it would cost to toss them out. That’s why you see “penny cups” next to every cash register; they save the seller time and the buyer the inconvenience of lugging around loose change that tears holes in pockets and now sets off alarms at every frisking-place. Why is the U.S. among the last of the industrialized nations to abolish the peskiest little bits of coinage? At the G-8 summit next week, the Brits and the French—even the French!—who dumped their low-denomination coins 30 years ago, will be laughing at our senseless jingling.

Weller, Mark W. Letter. Unpublished letter to the New York Times. Americans for Common Cents. 7 Nov. 2006.

Dear Letters to the Editor:

I was disappointed to read Bill Safire’s embrace of price rounding (“Abolish the Penny,” Op-Ed, June 2). While most of the arguments by penny opponents have been soundly rejected by the American public and Congress, Mr. Safire’s inaccuracies about penny circulation and other countries’ use of low denomination coins must be corrected. First, the statement that the “U.S. is among the last industrialized nations to abolish” its low-denomination coin runs counter to the facts. The European Union’s adoption of the euro included a one-cent euro coin or “euro penny.” The choice for the smallest coin denomination was mainly based on European policymakers’ observation that in the majority of member states the smallest coin denomination in circulation had a value equivalent to one cent. The EU also sought to avoid the systematic rounding of prices. And in the major industrialized countries, including Great Britain, Canada, Japan and the U.S., the penny or penny-equivalent remains in production and shares similar percentages of total coins produced in those countries. Second, two-thirds of pennies do not “immediately drop out of circulation.” A 2002 study based on Federal Reserve data indicated that the annual rate pennies disappear from circulation is surprisingly similar to all other forms of our coinage—around 5.6 percent. The fact is the penny remains popular with the public and important to our pricing system. Mark W. Weller Executive Director Americans for Common Cents Washington, D.C., June 3, 2004

“Abolish the Penny? A Majority of the Public Says ‘No.’”

The following are data from an independent poll.

FAVOR ABOLISHING THE PENNY?

“Would you favor or oppose abolishing the penny so that the nickel would be the lowest denomination coin?”

Income

Sahadi , Jeanne. “Pennies and nickels cost more to make than they're worth.” CNNMoney, Cable News Network, 11 Jan. 2016, money.cnn.com

It's still costing the U.S. government a pretty penny to make chump change.

Thanks to rising  metal prices, since 2006 the U.S. Mint has had to spend more money to produce and distribute nickels and pennies than the coins are actually worth.

How much more? About 1.7 cents to make a penny and 8 cents to make a nickel, according to a new report from the U.S.  Government Accountability Office.That in turn has reduced the overall profits the federal government realizes from making and circulating new coins in the economy.

The obvious solution: Just use cheaper metals.

Simple, right? Not so much.

For one thing, the U.S. Mint hasn't identified a metal composition cheaper than zinc, which makes up 97.5% of every penny.

Another problem is that the GAO reviewed various estimates and concluded that while the U.S. government could save some money by changing the composition of how it makes nickels, dimes and quarters, it would cost businesses more to use the newly made coinage.

That's because any industry that relies heavily on coins — think vending machines and coin-operated laundry machines, for example — would have to change their equipment to accept the new-fangled versions.

Citing U.S. Mint estimates, the GAO noted that the government could save up to $39 million a year, depending on the changes made. That's nothing to sneeze at, but no one should pretend those savings would have any discernible effect on the country's  annual deficits, which are counted in the hundreds of billions of dollars.

An industry group, meanwhile, estimates that changing the composition of nickels, dimes and quarters could cost businesses between $2.4 billion and $10 billion to modify coin machines.

But the GAO notes that those estimates are likely too high for a few reasons.

Among them, the industry group assumes nickels, dimes and quarters would have more steel in them. But the U.S. Mint has decided a steel quarter would be too easy to counterfeit and so has ruled that out.

Ultimately it will be up to lawmakers to decide when and if any changes should be made to current U.S. coins. There is no timeline for a decision, and the U.S. Mint has yet to make any concrete recommendations to Congress on the issue.

Rosalsky, Greg. “Is It Time to Kill the Penny?” NPR, NPR, 14 July 2020, https://www.npr.org/sections/money/2020/07/14/890435359/is-it-time-to-kill-the-penny.

Blame COVID-19. The U.S. Mint cut back on coin production this spring to keep its workers safe. Meanwhile, the economy is constipated. "With the closure of the economy, the flow of coins through the economy has … kind of stopped," explained Federal Reserve Chair Jerome Powell last month.

The coin shortage could be a rallying cry for a long-running movement that has lost steam in recent years: Kill the penny! Last year,  almost 60% of the coins that the U.S. Mint churned out were pennies. 60 percent. It made  more than 7 billion pennies. Seven billion. That's a lot of manpower that could be used toward making coins we actually need.

The penny is basically worthless. Actually, it's worse than worthless. It costs the U.S. government  about 2 cents to produce every penny. Pennies aren't even worth our time. Wake Forest University economist Robert Whaples has calculated that the typical American worker earns a penny every two seconds. It takes most of us more than two seconds to fumble around with change or pick a penny off the ground, which explains why there are so many pennies on the ground. Money is supposed to be the medium of exchange, not dead weight.

The congressman who tried to kill the penny

Jim Kolbe spent two decades trying to kill the penny. He's a former Republican congressman from Arizona, and he began his fight in the late 1980s. Initially, it was not a noble-minded quest to free us of the penny. He says, frankly, that he first wanted to help the copper industry in Arizona by getting rid of the paper dollar and replacing it with a copper-coin dollar. He saw polling that showed there was widespread support for killing the penny, so he and his colleagues bundled the idea of a new copper-coin dollar with the idea of killing the penny. (The penny is

By the 1990s, Kolbe says, he was introducing new legislation to kill the penny with every new session of Congress. But he kept facing resistance — for example, from the speaker of the House at the time, Dennis Hastert, who represented a district in Illinois, the home state of Abraham Lincoln. Lincoln, of course, is on the penny, and Kolbe says that proved to be a major roadblock. So were special interests such as zinc miners and the company that supplies the "penny blanks" used to mint the penny.

Penny defenders' strongest argument was that eliminating it would hurt consumers. All those $9.99 products? The prices would be jacked up to an even $10! They called it the "rounding tax." But Whaples, that penny-researching economist at Wake Forest University, conducted  a study of convenience stores and found that the final digit of purchases, which usually involve multiple products and a sales tax, was pretty much random. "And so if you round it to the nearest nickel, the customer wouldn't get gouged," Whaples says. Sometimes you'd round up; other times you'd round down. In the end, it would basically be a wash.

The U.S. Mint lost  over $72 million making pennies last year. But there doesn't seem to be much urgency about this because in the grand scheme of the federal budget, it's just pennies.

Smith, Ned. “Is It Time to Retire the U.S. Penny?” Business News Daily, 17 Oct. 2022, https://www.businessnewsdaily.com/3876-canada-penny-retired.html.

Would eliminating the penny affect small businesses?

Eliminating pennies may affect small businesses differently depending on how the process is implemented. Many feel businesses would likely encounter reduced checkout times (a positive result) and price rounding (a more uncertain result).  

· Reduced checkout times: A widely cited 2006 study by Walgreens and the National Association of Convenience Stores found that pennies can add about 2.5 seconds to cash transactions. Although this information comes from 2006, the nature of cash transactions has not changed substantially since then, so this figure likely remains the same today. Additionally, the anti-penny advocacy group  Citizens to Retire the U.S. Penny claims that the time pennies add to each transaction costs the U.S. $2 billion annually in lost revenue, with over 120 billion hours lost overall. 

· Price rounding: Another notable effect of penny elimination is price rounding. Without the penny, businesses couldn’t set their prices at one cent less than a whole dollar ($1.99, for example). A common practice in penny-free countries to adjust to this change is rounding prices to the nearest nickel (instead of $1.99, it would be $2). Some small business owners and consumers may feel nervous about how price changes would affect  customer loyalty. However, experts say that rounding transactions’ effects on profits and expenses are negligible.

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