Want to cut government waste? Start with the penny, says U.S. Senator to Musk
Government officials, economists, and comedians have complained about pennies for decades. Now, one U.S. lawmaker is moving to do something about the annoying one cent coins. Sen. Joni Ernst (R-IA) on Monday pointed to “bad pennies” as an example of waste, and called for action from the new Elon Musk-led Department of Government Efficiency.
Ernst, who will lead the Senate Republicans’ newly formed DOGE caucus, sent a letter to Musk and the other leader of the unofficial body, Vivek Ramaswamy. The letter called out pennies as one target for cost savings as part the Trump administration broader goal to cut $2 trillion in spending.
“The government is losing money making money, paying more than three cents to produce a penny and more than 11 cents for a nickel,” she wrote, citing the U.S. Mint’s annual performance plan. “That makes no cents when simply changing the composition of the coins could save more than $50 million a year.”
To be clear, Ernst did not explicitly call for the abolition of one-cent coins. Nonetheless, penny backers claim the ire surrounding the coin is misplaced.
Mark Weller, the executive director of a group called Americans for Common Cents, maintains the average cost of a penny exceeds its face value because the U.S. Mint allocates overhead costs based on production volumes, rather than direct labor. According to the mint’s annual report, over half of the coins it expects to ship this year will be pennies.
Weller confirmed his group receives financial support from Artazn, a Tennessee firm that is the sole manufacturer of the planchets, or small metal disks, that become pennies. Weller, a longtime Washington lobbyist, told Fortune it’s prudent to examine if the country can make coins in cheaper fashion.
“We don’t want any of these discussions to lead to a conversation about penny elimination,” he said, “because that, quite frankly, won’t save money.”
The U.S. Mint did not immediately respond to a request for comment.
The pros—and cons—of eliminating pennies
Ernst’s knock on pennies was just a small part of a partisan letter that was primarily spent on attacking California public transit and the National Science Foundation. Congressional Republicans, however, are far from the only figures who have bashed the country’s coins.
“America Must Free Itself from the Tyranny of the Penny,” New York Times Magazine declared in September. Almost a half-century ago, author Caity Weaver noted, then Treasury secretary William E. Simon Sr. begged Congress to consider abandoning one-cent coins as soon as possible. As president, Barack Obama called the penny a “good metaphor” for the U.S. government’s larger problems.
Countries like Canada, New Zealand, and Australia all stopped producing one-cent coins more than a decade ago. Sweden was a first mover in 1972.
Meanwhile, in 2022, the U.S. Mint said it would lose money making the penny and the nickel for an 18th consecutive year. Two-thirds of those one-cent coins never reenter circulation after touching the hands of consumers, but businesses need to keep their registers stocked to settle transaction amounts ending in digits other than 0 or 5.
“In other words,” Weaver wrote, “we keep minting pennies because no one uses the pennies we mint.”
Making coins of all denominations, meanwhile, is getting costlier as copper, nickel, and zinc become more expensive. The price of nickel increased over 80% from 2020-22, the U.S. Mint said in a report to Congress, with the cost of the other two metals increasing roughly 60% in that span.
But getting rid of the penny isn’t a true solution, according to Weller. By preventing price rounding, he said, one-cent coins serve as a safeguard against inflation. Even if the effect of rounding to the nickel would be small, he said, consumer perceptions of higher prices could be damaging.
“We just had an election,” he said, “where obviously inflation and cost issues were one of the paramount concerns.”
He also claimed pennies remain an important part of America’s cash infrastructure. As Fortune has previously reported, several U.S. cities require merchants to accept bills and coins, recognizing that millions of Americans lack access to payment cards and other tools of the banking system.
Perhaps the “DOGE” will have an opinion on whether one-cent coins remain necessary.
