Elon Musk has achieved feats once thought impossible, like popularizing electric vehicles through Tesla and catching falling rockets at SpaceX. But now he faces what may be an even more insurmountable challenge: overcoming political inertia in order to eliminate Americans’ least-favorite form of money, the penny, which Barack Obama once cited as an apt metaphor for the U.S. government’s larger problems.
Musk’s Department of Government Efficiency officially set its sights this week on the one-cent coins as part of its crusade to slash government spending. The move comes after Sen. Joni Ernst (R-Iowa), who leads the Senate’s “DOGE Caucus,” sent a letter of suggestions to Musk that included “bad pennies” as an example of waste.
In a Wednesday post on X, the social media platform Musk owns, DOGE’s account emphasized that the government is losing money making one-cent coins.
“Penny (or 3 cents!) for your thoughts,” the post read.
According to the U.S. Mint, the cost to produce a single penny jumped 20% during the 2024 fiscal year to 3.69 cents. Meanwhile, the government paid 13.78 cents per nickel—a 19% increase from the year before—as the unit cost of both coins remained above face value for a 19th consecutive year.
Usually, the government makes a profit issuing currency, known as seigniorage, but the U.S. Mint lost $179 million producing once-cent and five-cent coins for circulation in FY2023, which the DOGE tweet misattributed to just the penny. This past fiscal year, that total fell to $103 million as the Mint shipped over 1.2 million fewer nickels.
The Mint did not respond to a request for comment.
Countries like Canada and Ireland eliminated their version of the penny over a decade ago, meaning that merchants simply round prices up or down to the nearest five-cent increment. And even if the U.S. has yet to do so, there has long been political and popular support for the move.
Politicians and government officials, including Treasury Secretaries and former directors of the Mint, have complained about the absurdities of producing pennies for decades. As the New York Times Magazine noted in September, two-thirds of the one-cent coins never reenter circulation after touching the hands of consumers. Businesses, however, need to keep their registers stocked to settle transaction amounts ending in digits other than 0 or 5.
“In other words,” Caity Weaver wrote, “we keep minting pennies because no one uses the pennies we mint.”
These problems, however, loom larger as making coins of all denominations becomes more expensive due to rising prices for metals like copper, nickel, and zinc. The price of nickel increased over 80% from 2020–2022, the U.S. Mint said in a report to Congress, with the cost of the other two metals increasing roughly 60% in that span.
That report summarized several alternative compositions of U.S. coins, including a potential replacement for the traditional copper-plated zinc penny. A version using steel, however, was not found to yield any savings.
It’s unclear whether DOGE will pursue eliminating one-cent coins altogether. Nonetheless, proponents of the penny say it’s misleading to claim such a move would reduce government costs.
Mark Weller, the executive director of a group called Americans for Common Cents, has said the average cost of a penny exceeds its face value because the Mint allocates overhead costs based on production volumes, rather than direct labor. According to the Mint, pennies accounted for 54% of the coins it issued in the 2024 fiscal year.
“Since nickel production will increase without the penny,” said Weller, a longtime Washington lobbyist, “it’s hard to see how you save money by making more nickels that are losing more money.”
He has 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.
This story was originally featured on Fortune.com
