What the Death of the Canadian Penny Says about the U.S.
“Canada is scrapping the penny, ending production of the country’s smallest unit of currency this spring.
Finance Minister Jim Flaherty, whose department described the penny as a “nuisance” in budget documents, said the coin is now more trouble than it’s worth.
The Royal Canadian Mint will stop distributing pennies to financial institutions in the fall of 2012 and the government will work to withdraw one-cent coins from circulation.
The Harper government said the production cost of each penny exceeds its face value. “It costs taxpayers a penny-and-a-half every time we make one,” Mr. Flaherty told the Commons. “Therefore we will stop making them.”
In the United States, you never hear politicians or members of the cabinet saying things like, “It costs taxpayers a penny-and-a-half every time we make one. Therefore we will stop making them.” We don’t make politically neutral, factual statements.
This is why we still have pennies. It’s also why we can’t make sensible reform to medicare*, or end tax subsidies to oil companies**, or even agree to a long-term road building budget***.
Our government is so paralyzed by mutual distrust and ideological rigidity that it can’t implement even the most obvious long-term policies, which is a huge drag on our economy.
Anyway, congratulations on getting rid of your penny, Canada. Even though ours cost our taxpayers far more each year, it looks like we’ll be keeping ours indefinitely.
* The current Republican budget does pretty much dismantle medicare, the American program to get health care to seniors. But in the past few years, Republicans have proposed some sensible reforms to medicare. Medicare is far more efficient in some states than others, often while getting better health care outcomes. But the Democrats refuse to talk about it, because it would “hurt seniors.” (The President is an exception here.)
** I know of no economist who thinks ending these tax subsidies would result in the price of gasoline going up. It is insane to offer billions of dollars of tax breaks to oil companies that already have billions of dollars in profits; it does not incentivize them to do business in the US, and it does not affect the price of gasoline, and it is just insane. And yet Republicans refuse to act because it would mean “raising taxes.”
*** By far the most insane thing the US government is doing these days is refusing to agree to a long-term highway budget. Instead, they’re sending it out piecemeal. This means that states building roads must make short-term contracts, which cost much more per mile of road than long-term contracts. But if we agreed to a long-term roads package, it would mean agreeing to some huge number—400 billion dollars or whatever—and then one’s political opponents would be like, “S/he voted for 400 billion in GOVERNMENT SPENDING,” and … yeah. So we end up spending much more on roads than we need to so that it will SEEM like we are spending very much. That basically sums up the whole affair.