Eliminating the penny is about the most straightforward, obviously beneficial public policy that one can imagine. The idea that eliminating the penny would increase inflation is a joke. (Note also that although many products are priced at _.99 most purchases are of more than one product so many bills are of the form _.01 or _.02 so many bills will be rounded down even when prices are rounded up.)
But politics infects everything even the most technocratic of decisions. The main lobbying group in favor of the penny, for example, is Americans for Common Cents, which is funded by the zinc industry (zinc being the main ingredient in pennies). Thanks to AfCC we will have at least four new pennies in 2009 to honor that famous penny pincher Abraham Lincoln.
On the opposite side is representative Jim Kolbe who Sebastian Mallaby calls an Olympian statesman for his opposition to the special interests and dedication to efficiency. Well maybe, but it’s no accident that Kolbe is from Arizona the dominant producer of copper the main ingredient in… you guessed it… the nickel.
Hat tip to Roger Congleton.