Why does America still use the penny?

Ernst, who will lead the Senate Republicans’ newly formed DOGE caucus, sent a letter to Musk and the unofficial body’s other leader, Vivek Ramaswamy. The letter cited pennies as a target for cost savings as part of the Trump administration’s broader goal of cutting spending by $2 trillion.

“The government loses money by making money by paying more than three cents to produce a penny and more than 11 cents to produce a nickel,” she wrote, citing the U.S. Mint’s annual performance plan. “That doesn’t matter a dime when a simple change in the composition of the coins could save more than $50 million a year.”

To be clear, Ernst did not specifically call for the abolition of one-cent coins. Nonetheless, penny supporters claim that the anger surrounding the coin is misplaced.

Mark Weller, executive director of a group called Americans for Common Cents, contends that the average cost of a penny exceeds its face value because the U.S. Mint charges overhead costs based on production volume rather than direct labor. According to the Mint’s annual report, more than half of the coins it expects to ship this year will be pennies.

Weller confirmed that his group receives financial support from Artazn, a Tennessee company that is the sole manufacturer of the planchets, or small metal disks, that become pennies. Weller, a longtime Washington lobbyist, said Assets It is advisable to check if the country can produce coins in a cheaper way.

“We don’t want any of these discussions to turn into a conversation about eliminating pennies,” he said, “because, quite frankly, that’s not going to save money.”

The US Mint did not immediately respond to a request for comment.

The Pros and Cons of Eliminating Pennies

Ernst’s penny attack was just a small part of a partisan brief used primarily to attack California’s public transit system and the National Science Foundation. However, Republicans in Congress are far from the only figures who have criticized the country’s coins.

“America must free itself from the tyranny of the penny.” New York Times Magazine declared in September. Nearly half a century ago, author Caity Weaver noted, then-Treasury Secretary William E. Simon Sr. asked Congress to consider eliminating one-cent coins as soon as possible. As president, Barack Obama called the penny a “good metaphor” for the larger problems facing the U.S. government.

Countries like Canada, New Zealand and Australia all stopped producing one-cent coins more than a decade ago. Sweden was a pioneer in 1972.

Meanwhile, the U.S. Mint said it would lose money in 2022 producing the penny and nickel for an 18^Th year in a row. Two-thirds of those one-cent coins never return to circulation after touching consumers’ hands, but businesses must keep their coffers stocked to account for transaction amounts that end in digits other than 0 or 5.

“In other words,” Weaver wrote, “we continue to mint pennies because no one is using the pennies we mint.”

Meanwhile, producing coins of all denominations is becoming increasingly expensive as copper, nickel and zinc become more expensive. The price of nickel rose more than 80% from 2020 to 2022, the U.S. Mint said in a report to Congress, with the cost of the other two metals rising about 60% during that period.

But getting rid of the penny isn’t a real solution, according to Weller. By preventing price rounding, one-cent coins serve as a hedge against inflation, he said. Even if the effect of rounding on nickel was small, consumers’ perception of higher prices could be damaging, he said.

“We just had an election,” he said, “where inflation and cost issues were obviously some of the biggest concerns.”

He also claimed that pennies remain an important part of America’s cash infrastructure. As Assets As previously reported, several U.S. cities are requiring merchants to accept bills and coins, recognizing that millions of Americans lack access to payment cards and other banking tools.

Maybe “DOGE” will have an opinion on whether one cent coins are still necessary.