Banking with yourself
The US government doesn’t actually spend $890,000 a year on zero balance accounts
David A. Fahrenthold claims in the Washington Post that the US government spends at least $890,000 a year on account fees for empty accounts that have a zero balance:
It is one of the oddest spending habits in Washington: This year, the government will spend at least $890,000 on service fees for bank accounts that have nothing in them. At last count, Uncle Sam has 13,712 such accounts, each with a balance of zero.
These are supposed to be closed. But nobody has done the paperwork yet.
So even now — as the sequester budget cuts have begun idling workers and frustrating travelers — the government is still required to pay $65, per year, per account, to keep these empty accounts on the books.
Kevin Drum points out that this is an infinitesimal amount of money compared to the overall size of the federal budget. However, as small as it is, even the $890,000 is probably overstated. The clue is here:
First, a federal agency gives out a grant. It doesn’t just write a check; it creates an account within a large, government-run depository. The grantee can draw money out from there.
The $65 per year fee is not paid to a private bank like the fee you might pay for a checking account. The account is with the Payment Management System, managed by an agency of the US Department of Health and Human Services. PMS charges grant-making agencies a fee, based on one of two fee plans. This means that the net cost to the government of zero balance accounts is not $65 a year, which is simply transferred from one agency to another, but the incremental cost for PMS to manage these dormant accounts. Since they have no activity, that figure is probably a lot less than $65, and may even be zero.
