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Time to kill the cent

The following editorial appeared in the Chicago Tribune:


They cost too much to make. They weigh down your pockets. Retailers hate counting them. As a unit of value, they’re practically worthless.

Why, oh why, can’t America bring itself to eliminate its pennies?

Abe Lincoln’s craggy profile is the only thing we’d miss about those obsolete brown circles spilled across dressers and nestled in seat cushions coast to coast.

Sentiment aside, the argument for keeping the penny isn’t worth a cent.

On Capitol Hill, the coin’s best friends are the mining companies and the counting-machine makers who have a financial interest in its continued existence. Some pro-penny advocates have resorted to scare tactics over the years, warning that retailers would rip off consumers by rounding up all prices to the nearest nickel. That might apply to single items exempt from sales tax with prices ending in nine. But there is no reason to believe the transition to a penny-free economy by itself would result in sweeping inflation.

Anyone looking for a solution to the nation’s penny problem doesn’t have to look far. As with banking regulation and the recipe for a proper poutine, America’s neighbor to the north has got it right.

Canada just announced a budget that calls for eliminating pennies, and we hope our nation will follow its example.

The Canadian plan is simple: Halt distribution of one-cent coins as of this fall, while allowing those outstanding to remain legal tender until they disappear from circulation.

In its announcement, the Canadian government noted that New Zealand, Australia, the Netherlands, Norway, Finland and Sweden, among others, already have made similar transitions smoothly.

The No. 1 goal is saving money. Pennies cost more to make than they’re worth — a lot more, in the case of the U.S. According to the most recent figures, the cost for the U.S. Mint to produce and distribute one cent has risen to 2.41 cents, its highest level ever. That number includes material costs, which have soared in recent years, as well as sales, general and administrative expenses.

In 2010, Congress passed the Coin Modernization, Oversight and Continuity Act, which authorizes the Treasury Department to investigate whether less-expensive materials and techniques could be used to make and distribute the penny, which is now composed mainly of zinc. The U.S. Mint has hired a contractor to conduct the research, and expects to issue the findings in December. President Barack Obama’s 2013 budget would allow the Mint to bypass Congress and change the composition of coins on its own authority.

We’ve got a better idea than spending taxpayer dollars to engineer a cheaper penny. Get rid of it. And while we’re at it, let’s learn another lesson from Canada and start using one-dollar coins.

That move is a tougher sell, though it also would save the government mega-bucks since coins last far longer than paper currency.

Americans have resisted adopting our nation’s various versions of the gold-colored “loonie,” which since its introduction in 1987 has replaced folding dollar bills in Canada. (Canada also mints a “toonie,” worth two Canadian dollars). In the U.S., the Susan B. Anthony dollar — first minted in 1979 — flopped partly because it looked too much like a quarter. The subsequent Sacagawea “golden dollar” is barely used apart from vending machines and transit systems. The even newer presidential dollar coins have fared no better for general purposes, though collectors like them.

The most effective way to introduce Americans to the dollar coin would be to stop printing dollar bills. We believe that day will come — eventually. Let’s start with pennies, and work our way up.

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