Penny pinching: Elon Musk looks at the cent to cut costs

President Donald Trump has charged Elon Musk and his Department of Government Efficiency with slashing large portions of the federal budget, and one idea Musk has proposed targets a longstanding grievance among politicians: the penny. DOGE (which is not actually a government agency but rather an advisory group) has suggested that stopping the production of the penny would save American taxpayers millions. The group said as much in a post on X, claiming that eliminating penny production was a "penny (or 3 cents!) for your thoughts." The idea of halting penny production is not new, as the one-cent piece has been the ire of politicians for years. However, the conversation is being turbocharged with Trump back in power and Musk at his side.

How much does it cost to produce pennies?

Producing 4.5 billion pennies "cost U.S. taxpayers over $179 million" in the fiscal year 2023, meaning each one "costs over 3 cents to make," said DOGE on X. However, government statistics show this is only partially true; the $179 million taxpayers paid was the combined cost to produce both pennies and nickels, according to the U.S. Mint's 2023 annual report. Pennies alone cost taxpayers $86 million. The high cost of producing relatively small amounts of money goes back a long time. In 2013, taxpayers lost $105 million on penny and nickel production, and that year, the "cost of making pennies and nickels exceeded their face value for the eighth year in a row," said The Washington Post. However, pennies in particular remain the major target for potential spending cuts.

Would stopping penny production be a meaningful cut?

DOGE and Musk are "taking aim at an issue that has sparked debate for years," but these costs represent "mere metaphorical pennies when it comes to DOGE's mandate to cut federal spending," said CBS News. Musk originally claimed he could cut $2 trillion from the federal budget. He then walked this figure back, and has since said DOGE "will aim to trim $500 billion in annual federal spending." Even this figure represents a lofty goal compared to the production cost of the penny. Despite this, lawmakers have continued to push for price cuts related to pennies. Both Democrats and Republicans have proposed eliminating pennies from circulation, but there "could be a costly downside to ditching the cent, as transactions would be rounded to 5-cent intervals," said the Federal Reserve Bank of Richmond in a 2020 blog post, according to CBS. It's "not clear from one post if DOGE plans to officially take on eliminating the penny — and Musk's group alone doesn't have the power to get rid of the coin," said Business Insider. Congress "would need to pass a law stopping the distribution of the coin or, in theory, the Treasury secretary could decide that the nation doesn't need to make any more." And some argue that this isn't worth it. Economists "don't want any of these discussions to lead to a conversation about penny elimination, because that, quite frankly, won't save money," Mark Weller, the executive director of the pro-penny organization Americans for Common Cents, said to Fortune. While the penny is in their crosshairs, 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," said CBS. The U.S. Mint's 2024 annual report "noted that it spends about 14 cents to make and distribute each nickel."