Billionaire Elon Musk’s Department of Government Efficiency has a new target in its sights for trimming federal spending: the U.S. penny.
In Tuesday X post, Musk’s DOGE wrote that the U.S. spends about 3 cents to mint each penny, which, of course, is only valued at 1 cent.
“The penny costs over 3 cents to make and cost U.S. taxpayers over $179 million in FY2023,” DOGE wrote. “The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced.”
In pointing out the penny’s costliness, DOGE is taking aim at an issue that has sparked debate for years, although the price of manufacturing the cent has only grown over the past several years. In 2016, for instance, the U.S. was spending about 1.5 cents to mint each penny, or less than half of its current manufacturing cost.
Still, the cent’s $179 million in costs represents mere metaphorical pennies when it comes to DOGE’s mandate to cut federal spending. President Donald Trump has said DOGE will provide recommendations to “slash excess regulations, cut wasteful expenditures and restructure federal agencies.” Musk has said the group will aim to trim $500 billion in annual federal spending.
DOGE co-leader Vivek Ramaswamy, recently announced he is leaving the organization, posting on social media on Jan. 20 that he will be stepping back from the effort to run for Ohio governor.
On Monday, Mr. Trump signed an executive order officially creating DOGE, which will be housed within the executive branch and focus on upgrading the government’s IT systems to “maximize governmental efficiency and productivity.”
The penny’s rising cost
During the past year, the penny’s costs have only continued to rise, with the U.S. Mint’s 2024 annual report finding that one cent now costs about 3.7 cents to manufacture and distribute.
Pennies are mostly made of zinc, with a copper overlay to give them their distinctive color. While zinc’s price fluctuates from year to year, its cost per metric ton is now double what it was in 2016, according to data from the Federal Reserve Bank of St. Louis.
Federal officials have proposed suspending the penny in prior years, with former Treasury Secretary Jacob Lew pushing the idea in 2015. Some economists have also advocated for dropping the penny from circulation, but there could be a costly downside to ditching the cent, as transactions would be rounded to 5-cent intervals, the Federal Reserve Bank of Richmond said in a 2020 blog post.
“For a single item or small-value purchase, rounding up or down could represent a significant price change,” the post noted.
Other nations have ditched their equivalent of the penny, including Canada, which stopped minting its one-cent coin in 2012. One 2018 economic analysis found that Canadian consumers paid about $3.27 million in additional Canadian dollars at grocery stores each year due to prices being rounded higher after the change.
“On the other hand, there may be additional, hard-to-quantify costs to using pennies that would argue in favor of elimination. Counting pennies to make change takes time, and as the old business adage goes, time is money,” the Richmond Fed noted.
DOGE might want to set its sights beyond the lowly penny, as it’s not the only coin that costs more to mint than it’s worth. The U.S. Mint’s 2024 annual report noted that it spends about 14 cents to make and distribute each nickel.
