It's ironic that on the eve of President's Day weekend President Obama said he would support eliminating the penny. "Such a move would remove the image of one of our great presidents, Abraham Lincoln, from public view in our circulating coinage and harm consumers," said Americans for Common Cents Executive Director Mark Weller.
President Obama is wrong to state that the penny is one of the those situations "where people get attached emotionally to the way things have been." "American's may have an emotional attachment to Lincoln and the penny, but their strong support for the penny is based on economic issues," Weller said. "The alternative to the penny is rounding prices, which is something consumers abhor," Weller added. Rounding simply can't be done fairly and will hurt working families.
During the Presidential campaign, President Obama consistently reminded Americans about economic fairness. Federal Reserve studies show that people with relatively low incomes use cash more frequently than individuals with high incomes. Since only cash transactions will be subject to price rounding, it follows that penny elimination and rounding prices will force the poor to bear a larger share of the burden.
President Obama also said he wants to reorganize inefficient agencies to create a more modern infrastructure. In doing so, he needs to look no farther than the US Mint. The penny costs two cents to make and the nickel costs over ten cents to produce due largely to fixed costs at the Mint. "If you focused on production costs alone you'd have no penny and no nickel and you'd round to the dime," Weller said. "But no one thinks that option makes sense," he added. Congress and the Administration must find ways to make our coins less expensively, not eliminate coins and currency. An ongoing Mint study into alternative metals for our coins is a step in the right direction.
The penny is our nation's final line of defense against inflation. Without it, we would see a jump in prices that will add billions to government outlays.
"In these uncertain economic times, the last thing consumers need is price rounding, inflation or reduced charitable assistance," concluded ACC Policy Director Robin Adams.