Pennies on the Dollar: Elon Musk’s Bold Plan to End America’s Smallest Waste

What Happened?

In his new role as the head of the Department of Government Efficiency (DOGE), Elon Musk has drawn attention to the surprising inefficiency involved in producing pennies in the United States.

In 2023, the U.S. Mint spent a whopping $179 million producing more than 4.5 billion pennies ($45 million), with each penny costing more than three cents to manufacture.

The root of the problem lies in the cost of the materials. Zinc, which makes up 98% of a penny's composition, has doubled in price in recent years, making the production of the penny increasingly more expensive.

This particular example of government inefficiency is hardly a new issue. For decades, policymakers and economists have sparred over whether or not pennies are worth the cost of their production. As critics have insisted that the expenses involved far outweigh the benefits of keeping them in circulation.

Musk's endeavor to tackle the problem of government inefficiency comes as a part of DOGE's mission to eliminate wasteful government spending, with the hope of saving the U.S. taxpayers up to $500 billion annually.

In targeting the production of the penny, Musk highlights how even small, seemingly inconsequential inefficiencies can compound into significant costs for the federal government.

Why it Matters

The implications of eliminating the penny from circulation go beyond mere cost savings. For one, the United States would be aligned with how other countries have phased out their own low-denomination coins.

For example, Canada eliminated its penny in 2013, opting to simply round cash transactions to the nearest five cents. The transition has been considered largely successful, as there has been minimal impact on Canada's economy and consumers.

The United States could follow a similar model, by simplifying transactions and reducing consumer reliance on physical currency in an increasingly digital world.

There is also an environmental argument for discontinuing the Little Lincolns. The mining and processing of zinc requires significant energy and generates excess amounts of waste. With billions of pennies being produced every year, the environmental toll is significant, especially when you weigh it against their benefits.

Still, pennies hold sentimental value for many Americans, with many viewing them as an enduring symbol of U.S. history and culture. Additionally, some have expressed concerns for businesses that are heavily reliant on cash transactions, as they may struggle to adapt to rounding practices.

Small retailers in particular have raised their own concerns, regarding the elimination of pennies could affect pricing strategies and customer perceptions. Though eliminating the penny would save millions, these concerns do highlight the emotional and logistical hurdles Musk may face in his cost-cutting crusade.

Other critics argue that Musk's approach to cut down on government inefficiency could be put to better use. By attacking the much larger inefficiencies that they believe are rife in government spending, such as wasteful contracts and outdated programs. They believe that eliminating these would yield far greater savings if addressed.

How it Affects You

Regardless of how readers feel about the pros and cons, the question is not simply whether or not the penny is worth keeping. But whether the government can continue to afford to ignore inefficiencies, regardless of how small they may seem.

How taxes are allocated is critical, and even small changes can set a precedent for more significant reforms down the road.

And if Musk's plans, as the head of DOGE are to be taken seriously, Americans can expect to see many more examples like this, as he plans to cut $500 billion in government spending annually until 2029.