DOGE may target the penny: Why do we still have it anyway? - Insurance News | InsuranceNewsNet

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January 26, 2025 Newswires
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DOGE may target the penny: Why do we still have it anyway?

Addy BinkCBS - 9 WNCT

(NEXSTAR) — From daylight saving time to diversity, equity, and inclusion programs, there are various aspects of the federal government that the Department of Government Efficiency (DOGE) and its head, Elon Musk, have targeted in order to cut spending.

Now, it seems to have a new prey: the penny.

In an X post on Tuesday, DOGE (which the Trump administration was immediately sued over on Inauguration Day), wrote that the penny costs more than three pennies to make, costing U.S. taxpayers "over $179 million" (or, 17.9 billion pennies) through 2023.

RELATED: What is DOGE, the new department under the Trump administration?

The latest report from the U.S. Mint shows that pennies accounted for more than half of the 5.9 billion circulating coin shipments from the Federal Reserve Bank in 2024. The cost of the penny also increased to 3.69 cents, marking the 19th consecutive year the coin has "remained above face value."

Roughly 3.23 billion pennies were minted in 2024, data from the U.S. Mint shows. That's down slightly from the 4.52 billion pennies minted in 2023. In both years, pennies were the most produced coins followed by the dime in 2023 and quarters in 2024.

If it costs more, and Americans are increasingly using less cash, why does the Mint keep making pennies?

There are a number of reasons, experts say.

First is the practicality of the one-cent piece. While you're likely using cash less, when you do, you expect to receive the exact change you are owed. Without pennies, it would be difficult to, say, give you change on a $19.87 purchase if you pay with a $20.

It could also impact those who do not use credit or debit cards and instead rely on cash and coins. Doing away with a penny could even prove costly, in a sense.

Your paycheck may be larger in 2025, even if you don't get a raise

Canada parted ways with its penny in the early 2010s for the same reasons the U.S. has expressed regarding its penny. Now, if you're paying with cash in Canada, purchases are rounded to the nearest nickel (a $19.82 purchase becomes $19.80 while $19.83 becomes $19.85).

It's also difficult to make changes to our money.

Under the Constitution, Congress is responsible for regulating the Federal Reserve and overseeing our money. In a 2022 conversation about the penny, Ed Moy, 38th director of the U.S. Mint, noted it's "hard to get things through Congress." He said it's partially because the Mint brings in money.

"Even though you're losing $80 million a year on one single product line, $80 million is a pittance compared to a $4 trillion budget," he explained, adding that while money is lost on the penny, there's profit in the quarter and dollar coin which "more than outweigh whatever losses our coins are."

"So every company has a couple loss leaders or products that they're not happy with, but overall, as long as the company is profitable, which the Mint is, you want to change that, but there's no urgency to change that," Moy continued.

In the same conversation, Philip Diehl, the 35th director of the U.S. Mint, noted there is also interest from lobbyists representing those who manufacture the zinc used to make pennies, for example.

There have been efforts to make the penny cheaper to produce. Moy explained that even using a cheaper metal, like steel, would be ineffective. Plastics and polymers would also prove difficult, especially when put into coin-counting machines that look for metals.

Congress has tried to tackle the penny problem in recent years. In 2020, bipartisan bills were introduced in the House and Senate that would have given the Mint the power to "alter the composition of circulating coins to reduce the cost of manufacturing them," the Federal Reserve Bank of Richmond explains. Both bills failed to pass.

Similar bills were introduced in 2023, though they met the same fate.

"It's hard to think of a product, of any kind, in America that is as ubiquitous as the penny and as disposable as the penny," Diehl said.

A potential solution to the penny problem? Spending your pennies. According to a 2024 article from The New York Times Magazine, there are roughly 240 billion pennies that are waiting to be spent in the U.S. If the pennies aren't being put back into circulation, the Federal Reserve has to order more pennies — many of which will seemingly go unspent.

You may not want to rush your pennies back into circulation, though. In a 2022 report from the Federal Reserve, officials warned that "drastically reducing or ending the production of the penny," as Canada did, could lead to a "significant flowback of coin from consumers and businesses seeking to turn in their pennies."

Child tax credit: Could the amount change during Trump's presidency?

The same report suggested, however, that reducing penny production could save the Mint up to $100 million annually — that's not even 1% of the $2 trillion Musk claimed DOGE could cut in the "best-case outcome."

Whether or not the penny will become an actual area of focus for DOGE remains unclear. Musk previously described the federal government as a "room full of targets" that can be hit in order to save money.

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