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The U.S Government spend about 1.8 cent to make a penny which is worth 1 cent. Meaning the cost of a penny is more than it worth.

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(CNSNews.com) - The federal government spends almost twice as much to make a penny as a penny is worth, according to a new report from the Government Accountability Office.

However, says GAO, the government still makes a net profit-"seigniorage," it is called-from printing paper money and minting coins because the overall cost of producing the new U.S. money put into circulation each year remains less than its face value.

"Since fiscal year 2006, both the penny and the nickel have cost more to produce than their face value, according to our analysis of Mint data," said the GAO.

"For example, in 2017, the Mint spent approximately 1.8 cents to produce each penny and approximately 6.6 cents to produce each nickle," said GAO. "Because the Mint sells coins to the Federal Reserve at face value, both coins cost more to produce than the Mint receives for them.

"As a result," said GAO, "in 2017, the Mint incurred net losses of about $69 million to produce the penny and about $21 million to produce the nickel."

But the production of dimes, quarters and paper money more than make up for the deficits caused by the penny and the nickel.

"The dime and quarter, however, cost less to produce than their face value," said GAO. "The combined cost to produce all widely circulated coins (the penny, the nickel, the dime, and the quarter) is less than their combined face value, so the government continues to realize positive seignorage overall from producing circulating coins."

"The federal government spent about $1.3 billion to produce, process, and circulate notes and coins in 2017," said the GAO report. "These costs are offset by the financial benefit the government realizes when it issues notes or coins because currency usually costs less to produce than its face value. This benefit, which is known as seigniorage, is the difference between the face value of currency and its cost of production; this difference provides a financial benefit to the government when the government issues currency."

The net result is that the Federal Reserve and the Mint end up paying money to the Treasury.

"In calendar year 2017, the Federal Reserve reported transferring about $81 billion to the Treasury, and the Mint reported transferring about $269 million in fiscal year 2017," said GAO.

Of the $269 million that the Mint paid to the Treasury, GAO said, "about $250 million was from seigniorage; the remaining $19 million was net income from numismatic and bullion products."

This income created by the government making money, GAO concluded, helps reduce the federal debt.

"The seigniorage the Federal Reserve and the Mint pay into the Treasury reduces the need for the government to borrow money, and as a result, the government pays less interest over time," GAO said.

The GAO report said that the Mint had determined that it could save money by getting rid of the penny altogether and making other coins with cheaper metal.

"The U.S. Mint estimates that it could save approximately $250 million over 10 years by suspending penny production and between $2 million and $9 million per year by changing the metal composition of the nickel," said GAO.

"It also estimates that it could save about $74 million over 10 years by changing the metal composition of the dime and quarter," it said.

The federal government spent $4,107,741,000,000 in fiscal 2018, according to the Treasury. That equals about $7,815,337 in federal spending per minute.

The $250 million the Mint estimates the government could save over the next 10 years by getting rid of the penny would keep the government funded for approximately 32 minutes at last year's rate of spending.
The business and economic reporting of CNSNews.com is funded in part with a gift made in memory of Dr. Keith C. Wold.

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GAO: Feds Spend 1.8 Cents to Produce 1 Penny; But Government Still Makes Money From Making Money

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(CNSNews.com) - The federal government spends almost twice as much to make a penny as a penny is worth, according to a new report from the Government Accountability Office. However, says GAO, the government still makes a net profit-"seigniorage," it is called-from printing paper money and minting coins because the overall cost of producing the new U.S.

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Talk about the issue of penny. Given opinion about nickle as well.

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Many wouldn't know about a half cent. Given the reason it is worth so little it was discontinued in 1840s'. However the spent power is worth more than a penny and even a nickle.

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As for the other side getting rid of the penny can be beneficial to consumer.

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Ask The Times, a

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A hundred pennies cost $1.43 to produce. Credit... Jim Watson/Agence France-Presse - Getty Images

A reader asks: Why doesn't the United States get rid of the penny, as Canadians have done? Binyamin Appelbaum, a Washington correspondent for The Times who covers the Federal Reserve, considers the question. Times Insider feature, draws on New York Times expertise to answer questions about current events, science, sports, culture and whatever else is making headlines.
The same is true in the United States. Printing paper currency is hugely profitable for the federal government: The $100 bill is one of the nation's most valuable exports. Quarters and dimes are moneymakers too. But it costs $1.43 to produce 100 pennies. Last year, making pennies cost taxpayers almost $39 million.
Have a question for Ask The Times? Submit it using the form below.
In effect, eliminating the penny means all retail prices would end in zero or five. Some prices would rise a few pennies; some would be rounded down. Prices that end in 99 cents are common, and penny proponents have argued that eliminating pennies would amount to a one-cent sales tax. But Robert Whaples, an economist at Wake Forest University, actually examined this claim in 2007 by looking at pricing data from a chain of convenience stores. He reported that the savings from prices rounded down would roughly offset the cost of prices rounded up.

Aaron Sorkin posited through an episode of "The West Wing" that the government keeps making pennies because Abraham Lincoln is on the front, and lawmakers from Illinois, in particular, are reluctant to eliminate a ubiquitous tribute.

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Why Doesn't the United States (Finally) Get Rid of the Penny?

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Ask The Times, a A reader asks: Why doesn't the United States get rid of the penny, as Canadians have done? Binyamin Appelbaum, a Washington correspondent for The Times who covers the Federal Reserve, considers the question. Times Insider feature, draws on New York Times expertise to answer questions about current events, science, sports, culture and whatever else is making headlines.

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This article given an explanation,as to why the american people need to keep the penny.

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Does it still make sense to have the penny when more purchases are made with credit cards and other forms of electronic payment and the cost to make coins has increased? The answer, for a variety of reasons, is a resounding "yes."

First, consumers benefit with a low denomination coin. The penny helps keep high prices in check. The alternative to the penny, rounding prices to the nickel, hurts consumers.

Second, there is strong public support for the penny. National polling shows that more than 66 percent of Americans favor keeping the penny.

Third, penny elimination doesn't save money. In fact, government costs will increase without the penny.

Forth, America's wonderful charities raise millions from the penny. Groups like The Salvation Army and Ronald McDonald House Charities rely on these small contributions that prove the penny's value. Each of these points deserves further discussion.
Rounding Hurts Consumers, Especially the Poor
To the first point, economists agree on one principle: businesses are guided by a desire to maximize profits. There is no obvious incentive for businesses to set prices in a way that will lead to rounding down. Research by Penn State economist Ray Lombra, and more recently by Georgetown fellow Robert Shapiro, shows that consumers would be hit with a multi-billion dollar rounding tax without the penny.

According to Federal Reserve studies, people with relatively low incomes (particularly the young, elderly and minorities) use cash more frequently than individuals with higher incomes. In our economy, 60 percent of transactions under $10 are still conducted in cash. Since only cash transactions will be subject to rounding, any move to eliminate the penny would be regressive and hurt "unbanked" Americans who have no other option and lack the means to make non-cash transactions.
An Overwhelming Number of Americans Want to Keep the Penny
Second, polling over the last 30 years shows strong and unwavering public support for the penny. Polls conducted by Americans for Common Cents consistently show two-thirds (66 percent) to three-quarters (74 percent) of Americans favor keeping the penny in circulation.

Independent polls such as those by Coinstar, USA Today, and CNN/Time never have shown the level of public support for the penny below 60 percent. Americans understand that eliminating the penny would lead to a rounding process and cost them hundreds of millions of dollars in higher prices.
Penny Elimination Doesn't Save Money
Third, rounding to the nickel will lead to a demand for increased production of nickels, with a production cost of almost nine cents. It's hard to see how you save money by making more nickels that are losing money.

Moreover, there are fixed Mint overhead costs that would continue to be incurred if the Mint eliminates or suspends penny production. An August 2017 study funded by the coin-cashing service Coinstar estimated $295 million in real annual cost to taxpayers if the penny is eliminated.
Charities Thrive on Pennies
Fourth, many local fundraising drives are fueled by pennies. So too are canister collections by charitable organizations such as the Ronald McDonald House, Muscular Dystrophy Association, the Taco Bell Foundation and Salvation Army, among others. These collections prove the penny's value as money.

America's charities are the foundation of our nation's social safety net and help to ensure that people in need get the help they deserve. Penny drives and other innovative ideas are critical to all charities. The penny also funds innovative cancer research. One example from 2009 is particularly telling. On the 200th anniversary of Abraham Lincoln's birth, the Leukemia & Lymphoma Society celebrated in New York the 1.5 billionth ($150 million) penny collected by school students across the country for the "Pennies for Patients" program. The Leukemia & Lymphoma Society certainly recognizes that every penny literally counts.
Cash is More Convenient and Secure
Finally, the multitude of data breeches should dispel the notion that the digital economy is more secure. No doubt the credit card companies will continue to discourage the use of cash while trapping people in debt. Similarly, large data companies will continue to force customers to choose their cashless way, all the while profiting from ad buys tied to your digital profile and purchase history. But in a democratic society, freedom should also entail the freedom to choose one's form of payment.

So, can we do without the penny? Not if we want to keep inflation in check, protect America's hard working families, keep government costs down, and continue to help charities raise millions of dollars.

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Does it still make sense to have the penny when more purchases are made with credit cards and other forms of electronic payment and the cost to make coins has increased? The answer, for a variety of reasons, is a resounding "yes." First, consumers benefit with a low denomination coin.

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A brief topic as to why the penny need to be out of circulation in the U.S Economy.