In recent news, the Department of Government Efficiency (DOGE) is considering the elimination of the penny due to its production cost exceeding its face value. With the production cost of a penny being over 3 cents and costing US taxpayers over $179 million in FY2023, the DOGE aims to reduce government waste by potentially getting rid of the coin.
Senator Joni Ernst, among others, has expressed concerns about the significant expenses associated with minting coins in the US, leading to a conversation about the penny’s relevance. Some argue that the penny is obsolete and rarely used in transactions, leading to potential savings and efficiency if eliminated.
While some worry about the economic impacts of removing the penny, research shows that consumers may not be significantly affected. Studies have found that rounding transactions to the nearest nickel has little impact on total prices and could actually save time during transactions.
The US Mint is exploring alternative metals to reduce production costs, with one option being the 80/20 cupronickel alloy. Legislation has been introduced in Congress to grant authority for the use of these alternative metals, potentially saving millions of dollars in production costs. The Mint’s proposed budget for FY2025 is $5.7 billion, and adopting these alternative metals could lead to significant cost savings and increased profits for the US Treasury.
With countries like Canada already eliminating the penny and adjusting to rounding cash transactions, it will be interesting to see if the US follows suit in the near future. The debate over the penny’s future continues as policymakers, economists, and experts weigh the pros and cons of eliminating the coin.
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