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Elon Musk’s Department of Government Efficiency is targeting the penny, aiming to cut government spending. This move follows a suggestion from Senator Joni Ernst.
The department highlighted the rising cost of penny production, noting the government loses money on each coin. The cost to make a penny is now over three times its face value.
While the government typically profits from producing currency, it lost money on both pennies and nickels last fiscal year. However, the loss was less than the previous year due to a decrease in nickel production.
Eliminating the penny has been suggested before. Countries like Canada and Ireland have already done so, rounding transactions to the nearest five cents.
Many officials have supported the idea, pointing out that most pennies don’t recirculate. Businesses, however, still need them for exact change.
Rising metal prices contribute to the increasing cost of coin production. While the Mint has explored alternative penny compositions, a steel version wasn’t cost-effective.
Penny proponents argue that eliminating the coin won’t save money. They claim production volume, not direct labor, drives the high cost per penny.
Increased nickel production to replace the penny would likely lead to greater losses, they say. One such proponent is backed by a company that makes the metal blanks for pennies.