D.O.G.E. might cut the penny

From CBS News:

In Tuesday X post, Musk's DOGE wrote that the U.S. spends about 3 cents to mint each penny, which, of course, is only valued at 1 cent.

"The penny costs over 3 cents to make and cost U.S. taxpayers over $179 million in FY2023," DOGE wrote. "The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced."

In pointing out the penny's costliness, DOGE is taking aim at an issue that has sparked debate for years, although the price of manufacturing the cent has only grown over the past several years. In 2016, for instance, the U.S. was spending about 1.5 cents to mint each penny, or less than half of its current manufacturing cost.

Still, the cent's $179 million in costs represents mere metaphorical pennies when it comes to DOGE's mandate to cut federal spending. President Donald Trump has said DOGE will provide recommendations to "slash excess regulations, cut wasteful expenditures and restructure federal agencies." Musk has said the group will aim to trim $500 billion in annual federal spending.

Probably time to cash in the pennies I have around the house. Convert it into some real cash.

Federal officials have proposed suspending the penny in prior years, with former Treasury Secretary Jacob Lew pushing the idea in 2015. Some economists have also advocated for dropping the penny from circulation, but there could be a costly downside to ditching the cent, as transactions would be rounded to 5-cent intervals, the Federal Reserve Bank of Richmond said in a 2020 blog post.

"For a single item or small-value purchase, rounding up or down could represent a significant price change," the post noted.

Other nations have ditched their equivalent of the penny, including Canada, which stopped minting its one-cent coin in 2012. One 2018 economic analysis found that Canadian consumers paid about $3.27 million in additional Canadian dollars at grocery stores each year due to prices being rounded higher after the change.

"On the other hand, there may be additional, hard-to-quantify costs to using pennies that would argue in favor of elimination. Counting pennies to make change takes time, and as the old business adage goes, time is money," the Richmond Fed noted.

I don't know. I often don't use change when I spend cash. It has become more convenient for me to use a debit card for every day purchases. Although most of the time I do prefer cash.

I suppose since there are more options than cash when you have to spend at the store (any store - especially supermarkets) is it possible that change will have to be rounded up to a nickel?

Time will tell.

h/t Newsalert