Billionaire Elon Musk’s Division of Executive Potency has a brand new goal in its attractions for trimming federal spending: the U.S. penny.
In Tuesday X put up, Musk’s DOGE wrote that the U.S. spends about 3 cents to mint every penny, which, in fact, is handiest valued at 1 cent.
“The penny prices over 3 cents to make and value U.S. taxpayers over $179 million in FY2023,” DOGE wrote. “The Mint produced over 4.5 billion pennies in FY2023, round 40% of the 11.4 billion cash for flow produced.”
In declaring the penny’s costliness, DOGE is taking goal at a subject that has sparked debate for years, even though the cost of production the cent has handiest grown over the last a number of years. In 2016, as an example, the U.S. was once spending about 1.5 cents to mint every penny, or not up to part of its present production value.
Nonetheless, the cent’s $179 million in prices represents mere metaphorical pennies in relation to DOGE’s mandate to chop federal spending. President Donald Trump has mentioned DOGE will supply suggestions to “slash extra laws, lower wasteful expenditures and restructure federal companies.” Musk has mentioned the crowd will goal to trim $500 billion in annual federal spending.
DOGE co-leader Vivek Ramaswamy, not too long ago introduced he’s leaving the group, posting on social media on Jan. 20 that he’s going to be stepping again from the hassle to run for Ohio governor.
On Monday, Mr. Trump signed an govt order formally growing DOGE, which will likely be housed inside the govt department and concentrate on upgrading the federal government’s IT programs to “maximize governmental potency and productiveness.”
The penny’s emerging value
All over the previous yr, the penny’s prices have handiest persevered to upward push, with the U.S. Mint’s 2024 annual file discovering that one cent now prices about 3.7 cents to fabricate and distribute.
Pennies are most commonly made from zinc, with a copper overlay to provide them their unique colour. Whilst zinc’s value fluctuates from yr to yr, its value in line with metric ton is now double what it was once in 2016, in line with knowledge from the Federal Reserve Financial institution of St. Louis.
Federal officers have proposed postponing the penny in prior years, with former Treasury Secretary Jacob Lew pushing the speculation in 2015. Some economists have additionally advocated for losing the penny from flow, however there can be a expensive problem to ditching the cent, as transactions could be rounded to 5-cent periods, the Federal Reserve Financial institution of Richmond mentioned in a 2020 weblog put up.
“For a unmarried merchandise or small-value acquire, rounding up or down may just constitute a vital value trade,” the put up famous.
Different countries have ditched their similar of the penny, together with Canada, which stopped minting its one-cent coin in 2012. One 2018 financial research discovered that Canadian shoppers paid about $3.27 million in more Canadian greenbacks at grocery retail outlets every yr because of costs being rounded upper after the trade.
“However, there is also further, hard-to-quantify prices to the use of pennies that may argue in choose of removing. Counting pennies to make trade takes time, and because the outdated industry adage is going, time is cash,” the Richmond Fed famous.
DOGE may need to set its attractions past the lowly penny, as it isn’t the one coin that prices extra to mint than it is value. The U.S. Mint’s 2024 annual file famous that it spends about 14 cents to make and distribute every nickel.
