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 are empty. At last count, Uncle Sam has 13,712 such accounts with a balance of zero.
They are supposed to be closed. But nobody has done the paperwork yet.
So even as the sequester budget cuts have begun idling workers and frustrating travelers, the government is required to pay $65 per year, per account to keep them on the books.
In this time of austerity, the accounts are a reminder of something that makes austerity hard: expensive habits, built into the bureaucracy in times of plenty. The Obama administration has spent the past year trying to close these accounts, with only some success.
“If anyone had kept open a bank account with no money, and was getting a charge every month, they would do everything they could to close it,” said Thomas A. Schatz of the watchdog group Citizens Against Government Waste. But, he said, the government hasn’t shown the same kind of urgency with taxpayers’ money.
“It’s just lack of attention to detail. And poor management,” he said. “And, clearly, the fact that no one gets penalized for paying money to keep the accounts open.”
The money spent on the empty accounts is a tiny fraction of the federal budget. But, in its own way, it is something special: Washington’s waste, a rare specimen of cost untainted by any reward.
The Pentagon once paid $435 for a hammer, after all. But at least in that case it got a hammer.
Here, when the money is spent, “there’s no benefit whatsoever,” said Sen. Tom Coburn (R-Okla.), who has joined Sen. Thomas R. Carper (D-Del.) in pushing the Obama administration to close these accounts faster.
Administration officials said they’re trying. Last year, the Office of Management and Budget urged agencies to crack down on these “zero balance” accounts. And this year, it proposed a wide-scale push for better oversight.
“We have worked with agencies to improve the timely closeout of grants,” Danny Werfel, the controller at the OMB, said in an e-mail. “Agencies have made noteworthy progress so far, with the number of zero-balance accounts falling by more than 50 percent since the end of fiscal year 2011.” Back then, the total was more than 28,000.
Here is how the government winds up spending money on nothing:
First, a federal agency gives a grant. It doesn’t just write a check; it creates an account within a large, government-run depository. The grantee can draw money from it. The agency that created the account is charged a monthly fee, which goes to the government depository and is used to cover the costs of operating it.
Then, at some point, it’s over. The money runs out. Or the grant’s time limit expires. The agency is given notice: It’s time to close the account.