Q1 Problem with Pennies

1

The penny has been in circulation in the United States since 1793, shortly after President George Washington signed the Mint Act of 1792. Although now heavily associated with President Abraham Lincoln, his image wasn't stamped on the coin until 1909, when President Teddy Roosevelt chose to commemorate the one-hundredth anniversary of Lincoln's birthday. Despite its long and storied history with the United States, many people believe it should be eliminated from U.S. currency due to its expensive manufacturing costs, lack of usefulness in everyday transactions, and adverse environmental consequences. Others believe removing the penny from circulation would have a negative effect on the economy and, in the end, would cost the government money.
Carefully read the seven sources, including the introductory information for each source. Write an essay that synthesizes
material from at least three of the sources and develops your position on the question: Should the penny be
eliminated from U.S. currency?
Source A (Smithsonian)
Source B (the New York Times)
Source C (Retirethepenny.org)
Source D (U.S. Mint)
Source E (Chast)
Source F (ACC)
Source G (Navigant Consulting)
In your response you should do the following:
• Respond to the prompt with a thesis that presents a defensible position.
• Select and use evidence from at least 3 of the provided sources to support your line of reasoning. Indicate clearly
the sources used through direct quotation, paraphrase, or summary. Sources may be cited as Source A, Source B,
etc., or by using the description in parentheses.
• Explain how the evidence supports your line of reasoning.
• Use appropriate grammar and punctuation in communicating your argument.

Source A
The following is excerpted from an article published in a magazine that focuses on science, history, art, popular
culture, and innovation.
Most people know that pennies cost the government more to make than they're worth, even after the U.S. Mint
switched to using mostly zinc in 1982. They may not know that making all those pennies has a serious environmental
impact, from raw ore, to smelter, to mint, and then to banks before finally being dropped on the street or dumped
into a coin kiosk or a fountain.
So with those costs also in mind, is it possible to make the penny greener? …
Christine Knobel, Nicole Tan, and Darin Reyes spent a semester analyzing the information they could find to make
an assessment of the penny’s ecological footprint. Their conclusion was the true cost of making a penny adds up
to much more than 1.43 cents, or what the Mint reports it cost to produce a one-cent coin last year, though they
were not able to individually parse out the incremental cost per coin of mining, smelting, minting, and trucking the
coins—all energy intensive processes….
“The Government of Canada mainly phased out the penny due to its rising cost of production relative to face value,
the increased accumulation of pennies by Canadians in their households and the significant handling costs the
penny imposes on retailers, financial institutions and the economy in general,” said Canadian mint spokesman Alex
Reeves. “Environmental considerations did play a role as well, since ending production of a coin that was scarcely
in demand was beneficial to the environment.” …
In 2014, the Mint produced 8.15 billion one-cent coins. That’s 22,450 tons of pennies, which equates to 21,888 tons
of zinc and 562 tons of copper….
Getting all that ore out of the ground is costly, in terms of carbon dioxide emissions, pollutants, and power consumed.
A 2009 analysis found that Western copper mines use 35.7 gigajoules of energy per ton of copper produced,
with zinc and lead mines fairly more efficient, using only 6.6 to 6.8 gigajoules of energy per ton. The report also
found that greenhouse gas emissions for copper mining operations in 2007 averaged 2.45 tons of carbon dioxide
emitted for every ton of copper produced, compared with 0.58 tons of carbon dioxide per ton of zinc….
Despite the fact that the United States recycled 71.8 million tons of metal in 2013, the most recent year for which
data is available, not a single penny made today is recycled, at least by the Mint. Nor are any coins at the moment.
In part as a response to abuses of the Mint’s long-standing mutilated coin reclamation program, such as a recent $5.4
million plot by several metal scrap recyclers to profit from counterfeit coins imported from China, the Mint temporarily
suspended the program….
For decades, anti-pennyists have trotted out arguments advocating for the penny’s elimination, mostly because of economics.
Former Arizona congressman Jim Kolbe introduced three bills from 1989 to 2006 to try and get the government
to ditch its smallest denomination; … On the other hand, plenty of people are fine with the penny. For some, its chief
value is sentimental, a cultural icon; others worry that customers will suffer if prices get rounded up rather than down….
For Knobel, the UC Davis student, the answer seems clear: economically as well as environmentally, it makes sense
to get rid of the penny.
“After doing the research, it became clear that the penny isn’t needed,” she said. “If the Mint is trying to reduce
energy, why not reduce it by a whole coin? That would be a huge step in the right direction. I don’t think it’s going
to be that big of a deal.”

Source B
Binyamin Appelbaum. “Why Doesn’t the United States
(Finally) Get Rid of the Penny?” New York Times.
October 10, 2016.
The following is from an article published in a major U.S. newspaper.
Canada stopped making pennies in 2012, and with good reason. Coining pennies is a money-losing proposition, and
people don’t really need them anymore.
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.
And for what? The federal government makes and distributes coins to facilitate commerce, but not much can be
bought for less than five cents. Thanks to the magic of inflation, what cost a penny in 1950 requires a dime today.
Average American workers earned nearly a penny a second in 2015. It’s literally not worth their time to bend down
and pluck one from the sidewalk.
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.
Indeed, consumers might actually benefit. Retailers like prices that end in “.99” because people tend to underestimate
the actual price. When people see “$4.99,” they tend to pay too much attention to the 4 and not enough to the 99.
Yet Americans like the shiny copper (though not much copper) coins. In a 2014 poll, 71 percent of respondents said
they do pick up pennies. And 43 percent said they would be “disappointed” or “angry” if the government stopped
making them.
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.
President Obama, however, does not number among the sentimentalists. He said in 2013 he saw no reason to make
pennies. “It’s one of those things where I think people get attached emotionally to the way things have been,” he said.
He also offered what is probably the best explanation for the continued production of pennies: Congress struggles to
accomplish even the most obvious tasks.
The penny, Mr. Obama said, is “a good metaphor for some of the larger problems that we’ve got.” The government, he
said, has a poor track record of getting “rid of things that don’t work so that we can then invest in the things that do.”

Source C
Citizens to Retire the U.S. Penny. “It Makes ‘Cents.’”
Retirethepenny.org.
The following is a post published on the website of a nonpartisan organization that educates the public on the benefits
of removing the penny from circulation.
The Penny No Longer Facilitates Commerce
The fact that the penny is still in circulation does not mean it is in any way useful. Inflation has eaten away at the value
of the penny to such a degree that it no longer facilitates commerce. In other words, the penny cannot buy anything!
Remember the Half Cent?
The U.S. has already phased out a coin with no ill effects. The Mint stopped producing the half cent in 1857, when it
was worth what a dime is worth today, and there was no public outrage or damaging economic effects. Assuming the
timing was correct before, the penny should have been eliminated in 1950, when it was worth what a dime is today.
The penny served us well for a while, but now, at more than 200 years old, it's unable to keep up with inflation. Isn't
it time to let the penny retire?
The Penny Wastes Money
In 2011, the U.S. Mint produced almost 5 billion pennies—more than 60 percent of all coins made annually—at a
cost more than twice their worth. A significant portion of the cost is for the zinc that makes pennies, which is why
the zinc industry is paying its lobbyists six figures to keep the penny in production.
The Penny Hurts the National Economy
Walgreen's and the National Association of Convenience Stores estimated that handling pennies adds an average of 2
seconds to each cash transaction. Given the 107 billion cash transactions per year in 2012 (US Federal Reserve Payments
Study), using pennies therefore wastes 120 million hours of time per year counting the time of both the customer
and the store employee. At the U.S. median income/hour of $17, that costs the economy $2 billion every year!
Penny Non Grata at Military Bases
For those who think it is un-American to stop production of the penny, consider this: the Department of Defense
abolished the use of pennies at overseas military bases more than 30 years ago. According to the Army and Air Force
Exchange Service, the coins are "too heavy and not cost-effective to ship." The same logic applies in the States, as
five pennies weigh 12.5 grams compared to a 5-gram nickel.
Continuing to Honor Abe
A special interest group has suggested that to eliminate the penny is to forget Abraham Lincoln. Lincoln, and his
memorial, however, are firmly ensconced on the $5 bill, which is not going anywhere. At a cost of 8.5 cents per note
(based on the Federal Reserve budget for 2012), the $5 bill is both conducive to commerce and cost-effective.
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AP® ENGLISH LANGUAGE & COMPOSITION Practice Test 2: Section II
Source D
United States Mint. 2018 Annual Report. USMint.gov.
The following graphic is from a graph in the U.S. Mint 2018 annual report. The U.S. Mint manufactures U.S. coins,
bullion, and collectibles currently in circulation.
one-cent
8,057
five-cent
1,327
dime
2,381
quarter-dollar
1,895
half-dollar
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Shipments (millions of coins) CIRCULATING COINAGE
Circulating coin shipments decreased 2.8 percent to 13,668 million coins
in FY 2018, driven by decreased in pennies. Circulating revenue decreased
1.0 percent to $862.7 million because of lower quarter-dollar shipments.
Seigniorage decreased 18.0 percent to $321.1 million. Seigniorage per
dollar issued decreased to $0.37 from $0.45 last year.

Source E
“Penny Dreadful.” The New York Times. Illustration by
Roz Chast.
The following cartoon was published in a major U.S. newspaper.

Source F
Americans for Common Cents (ACC). “Canada Costs
to Produce Coins Increases Without the Penny.”
Pennies.org. February 24, 2017.
The following is an entry posted on the website of an organization that conducts research on the value and benefits
of the penny and provides such data to the U.S. government.
Data collected from Coinstar, whose coin-counting kiosks are used around the world, found there would be significant
Mint cost increases without the U.S. penny. Coinstar looked at their experience in Canada where the penny was
eliminated in 2013 and found reduced “velocity” or frequency of coin recirculation.
Two-thirds of all coins recirculated through the U.S. Federal Reserve System and commercial banks and thrifts come
from coin-cashing services. Since pennies comprise a majority of the coins recirculated through this process, eliminating
the penny would reduce the frequency of people returning coins, based on Coinstar’s experience in Canada.
Coinstar found the volume of Canadian nickels and dimes recirculated through these services fell off 35 percent
without the penny. They estimate that if the U.S. penny were eliminated, and the Mint offset just 25 percent of the
reduced volume of recirculated coins with new nickels, dimes and quarters, produced at 2015 metals prices, it would
cost the Mint an additional $77 million.
Two factors play into the increased government costs. First, the net costs rise or fall with metals prices. Using the
lowest metals prices over the last decade, the Mint would have to spend an additional $60 million to maintain adequate
coin recirculation, and applying the highest metals price of the last decade, the Mint would have to spend an
additional $181 million per year. Second, the net costs also rise if the Mint has to offset 50 percent or 75 percent of
the reduced volume of recirculated coins.
Coinstar argues there will be a $295 million real annual cost to U.S. taxpayers if the penny is eliminated.


Source G
Rodney J. Bosco. “Impact of Eliminating the Penny on
United States Mint Costs and Profit.” Navigant
Consulting, Inc. April 17, 2012.
The following is excerpted from a report created by a consultation firm, which was presented to the U.S. House of
Representatives.
In a separate report dated April 12, 2012, Navigant was asked to estimate the impact of eliminating production of
circulating pennies on losses currently being incurred by the United States Mint. We have found that ending production
of the penny would not completely eliminate the losses, and could even increase the overall loss to the United
States Mint due to increased production of the nickel and ongoing United States Mint overhead costs.
The United States Mint shipped 4.29 billion pennies (valued at $42.9 million) during fiscal year 2011 at a reported
cost of $103.1 million (2.4 cents per coin), resulting in a net loss of $60.2 million. However, eliminating production
of the penny would not eliminate this loss, and could even increase the overall loss to the United States Mint if production
of the nickel was increased to substitute for no production of the penny.
We analyzed publicly available information on the United States Mint’s past and projected operations to identify
patterns in costs related to its product offerings. We observed the following:
• Cost reductions from eliminating the purchase of penny blanks will be largely offset by the loss of revenue
from shipments to the Federal Reserve Banks (FRB). In other words, the payments received from the FRB
($42.9 million), which offset all but $4.3 million of the cost of penny blanks ($47.2 million), would not be
received if the United States Mint eliminated production of the penny.
• The United States Mint’s fabrication and distribution costs include fixed components that will continue to be
incurred if the United States Mint eliminated the penny. Using FY 2011 balances and prior United States Mint
disclosures, we have estimated this fixed component to be approximately $13 million.
• The United States Mint’s total SG&A expense is not sensitive to circulating coin demand or total sales. Thus,
the $17.7 million in SG&A assigned to the circulating penny in FY 2011would have been reallocated to other
products.
• Substitution of loss-generating nickels will offset potential cost reductions from eliminating the penny.
Without the penny, only $4.3 million in net cost reductions would have been likely in 2011, while an additional
$25.2 million in cost reductions would have been possible, based on 2006 comments by the Mint regarding the
amount of fixed production costs. However, the substitution of nickels for pennies would have resulted in an increased
net loss to the Mint of as much as $10.9 million if penny production were not maintained.