Billionaire Elon Musk's Department of Government Efficiency has a new target for slashing federal spending: American money.
In Tuesday's post, Musk's DOGE wrote That the US spends about 3 cents to mint each penny, which is of course only worth 1 cent.
“It costs more than 3 cents to build and will cost US taxpayers more than $179 million in fiscal year 2023,” DOGE wrote. “The Mint produced more than 4.5 billion coins in fiscal year 2023, approximately 40% of the 11.4 billion coins produced for circulation.”
By pointing to the inflation of the penny, DOGE is taking aim at an issue that has been debated for years, although the cost of minting cents has only increased over the past several years. For example, in 2016, the US was spending approximately 1.5 cents for each penny mintedOr less than half of its current manufacturing cost.
Still, the cent's $179 million cost represents mere metaphorical pennies when it comes to DOGE's order to cut federal spending. President Donald Trump has said that DOGE will “provide recommendations for reducing excess regulations, cutting wasteful spending, and restructuring federal agencies.” Musk has said the group's goal will be to cut annual federal spending by $500 billion.
DOGE co-leaders Vivek Ramaswamirecently announced that he was leaving the organization, entry On January 20, it was announced on social media that he would withdraw from his bid to run for Governor of Ohio.
On Monday, Mr Trump signed a executive Order Officially the creation of DOGE, which will be housed within the executive branch and focused on upgrading the government's IT systems to “maximize government efficiency and productivity.”
rising cost of money
Over the past year, the cost of money has continued to rise, with the US Mint anticipating 2024 annual report It was found that it now costs about 3.7 cents to manufacture and distribute one cent.
Pennies are mostly made of zinc, plated with copper to give them their distinctive color. While the price of zinc fluctuates from year to year, its cost per metric ton has now doubled compared to 2016. data From the Federal Reserve Bank of St. Louis.
Federal officials have proposed suspending Penney in past years, along with former Treasury Secretary Jacob Lew to advance the idea In 2015, some economists also advocated The Federal Reserve Bank of Richmond said in a 2020 blog post that it would be possible to remove the penny from circulation, but removing the cent could have a costly downside, as transactions would occur at 5-cent intervals.
“For single item or small value purchases, rounding up or down can represent a significant price change,” the post said.
Other countries have abandoned their equivalent money, including Canada, which ceased minting Its one cent coin in 2012. one 2018 economic analysis found that Canadian consumers paid approximately $3.27 million in additional Canadian dollars at grocery stores each year due to higher prices after the change.
“On the other hand, there may be additional, difficult-to-quantify costs for using pennies that would argue in favor of elimination. It takes time to count pennies to make change, and as the old business adage goes, time is money,” the Richmond Fed noted.
DOGE may want to set its sights beyond minting coins, as it is not the only coin that costs more to mint than it is worth. The U.S. Mint's 2024 annual report says it costs about 14 cents to make and distribute each nickel.