A Philosopher's Blog

The Cost of the Empty

Posted in Ethics, Philosophy, Politics by Michael LaBossiere on August 2, 2013
Government spending

Government spending (Photo credit: 401(K) 2013)

As the Washington Post notes, the US government spends at least $890,000 each year to maintain about 13,000 empty bank accounts. In terms of why such bank accounts exist , the gist is this: when the government gives out a grant an account is opened to distribute the money. When the grant ends, the account goes to zero. However, unless the account is closed, the government still has to pay the fees to maintain the account.

It might be wondered why the accounts are not simply closed. The answer is that closing an account requires that the grant be audited within 180 days of the account closing. Interestingly, there is actually no penalty for missing the deadline.

While $890,000 is a drop in the vast ocean of government spending, each drop adds to that ocean. Also, there is the fact that this spending literally yields nothing. While people do dispute the value of various programs ranging from food stamps to bridges to nowhere, at least that spending is for something. This is money for nothing and hence should be recognized as wasteful by both parties.

There are no doubt many other such expenditures that produce nothing and benefit no one. It would seem to be rather obvious that Congress should begin cutting the budget by dealing with all these empty expenditures. After all, eliminating such spending would be pure savings at no cost and there would be no special interests to battle or political agendas to address. While such expenditures will probably be relatively small, they would also add up. Also, there is the fact that even such relatively small amounts of money are relatively big in other contexts, such as small programs that do generate a valuable public good.

As might be guessed, the main reason such expenditures are not addressed is that it is easier to do nothing than to do something. This is, obviously enough, a bad reason.

It is, however, worth considering whether or not the cost of doing nothing exceeds the cost of doing something. Since the accounts must be audited before being closed, it could be argued that the cost of the audit would exceed the savings of closing the account. Thus, while it costs to keep them open, this is saving money.

One obvious reply is that the rules could be changed. After all, if the accounts can be left open indefinitely without an audit, then it would seem cheaper to forgo the audit rule and just close them to save money. After all, if no audit will ever be done, there seems to be no sense in requiring an audit when doing so merely costs money and does not have any positive benefit.

Another obvious reply is that it seems likely that the cost of an audit would not exceed the cost of keeping an account open indefinitely. After all, those payments could continue until the government ends and that could be quite some time.

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12 Responses

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  1. KimBoo York said, on August 2, 2013 at 8:17 am

    My first thought here is a deep suspicion about why audits are being avoided. Yes, auditing is a time and power intensive project — I used to be an account auditor for an insurance company, I know how much work it is, and how fun it is not — but it is required because, without fail, an audit will reveal problems in how the money was actually spent. I’m not saying this is necessarily a conspiracy-level suspicion, but I know how these kind of avoidance tactics can become systemic in a bureaucracy…with the result of endless amounts of money wasted, on TOP of the costs of just keeping the accounts open. While I’m very supportive of govt. grants for worthy projects, this makes me wonder how many of them are being misapplied/mismanaged as political favors etc.:/

  2. T. J. Babson said, on August 2, 2013 at 9:42 am

    I have worked in and around government bureaucracies my whole life.

    The fundamental dynamic is to avoid scandal at all costs. As an audit may lead to scandal, one of course avoids an audit as long as possible. It is perfectly rational.

  3. T. J. Babson said, on August 2, 2013 at 2:55 pm

    Democrats at work. One might get the impression that the segregationists were Republicans instead of Democrats, but one would be wrong.

    Also, after heaping so much abuse on the Tea Party, can Dems really be surprised that the Tea Party types don’t trust them?

    In an interview with the Daily Beast published Friday, Rep. Charlie Rangel (D-NY) suggested Tea Partiers are the “same group” who fought for segregation during the Civil Rights movement.

    “It is the same group we faced in the South with those white crackers and the dogs and the police. They didn’t care about how they looked,” Rangel said.

    http://livewire.talkingpointsmemo.com/entry/charlie-rangel-tea-party-is-same-group-of

    • WTP said, on August 2, 2013 at 9:13 pm

      Rangel, Sharpton, and J. Jackson are racist punks in the same vein as those “white crackers” they rail against. Just like the scum that vote and celebrate them.

  4. T. J. Babson said, on August 2, 2013 at 8:20 pm

    A reporter with some cojones would ask O if Romney was right about Russia.

    LAKE FOREST, Ill. — Mitt Romney took up the cudgels again against Russia on Monday, telling a radio interviewer that “almost everything we try to do globally, they try and oppose.” He accused President Obama, once again, of going soft on his Russian counterparts.

    The Obama campaign has ridiculed Romney for saying earlier this year that Russia was “without question, our No. 1 geopolitical foe.” Asked about that during a telephone interview with conservative radio host Hugh Hewitt, Romney neither repeated his claim nor backed down from it.

    “Russia is a geopolitical adversary, meaning that almost everything we try to do globally they try and oppose,” he said. “So we try and put pressure on Iran, they fought against crippling sanctions. We tried to get tough language at the U.N. and action against the brutality of [President Bashar] Assad in Syrian, they instead send attack helicopters to Syria. I mean, Russia has been opposing us in political circles for some time.

    http://articles.latimes.com/2012/sep/10/news/la-pn-mitt-romney-russia-syria-20120910

  5. WTP said, on August 2, 2013 at 10:19 pm

    A much greater “cost of empty”


    GAO matched every policyholder’s Social Security number in RMA’s crop insurance subsidy and administrative allowance data for crop insurance years 2008 to 2012 with SSA’s master list of deceased individuals and found that $22 million in subsidies and allowances may have been provided on behalf of an estimated 3,434 program policyholders 2 or more years after death.

    http://www.gao.gov/assets/660/655649.pdf

  6. T. J. Babson said, on August 3, 2013 at 6:44 pm

    What passes for rational argument among Democrats.

    Amid the spectacle that has become Anthony Weiner’s campaign for mayor, New Yorkers have heard many arguments calling for him to withdraw. Surely the least persuasive of these is the one advanced on national TV by Dee Dee Myers: that Bill and Hillary find his continued candidacy distasteful.

    Like so many others statements that involve the name Clinton, Myers later “clarified” her comments by saying she hadn’t actually spoken to the Clintons before saying they wanted Weiner out. Her remarks, however, fit with all the other anonymous complaints we hear that the Clintons are “livid” over the comparisons between Anthony and Bill — or Hillary and Huma.

    And here we have Weiner’s real sin: It’s not that he’s treated women shabbily. It’s that the national focus on Carlos Danger is an uncomfortable reminder of Bill Clinton’s own antics in office — and the way those around him fought to help him remain in office.

    http://www.nypost.com/p/news/opinion/opedcolumnists/the_biggest_weiner_of_all_vIwjymA4zrBaVCpyw8db5L

  7. WTP said, on August 4, 2013 at 3:15 pm

    What passes for “banter referring to sexual matters” among philsophers:

    http://www.nytimes.com/2013/08/03/arts/colin-mcginn-philosopher-to-leave-his-post.html?pagewanted=all&_r=1&

    • T. J. Babson said, on August 4, 2013 at 3:40 pm

      Maybe women are just too sensible to want to be philosophers?

      • WTP said, on August 4, 2013 at 4:53 pm

        No, I’m pretty sure it’s the sexist attitudes, just like in engineering and IT. Why should philosophy be any different? In domains in which women are already negatively stereotyped, interacting with a sexist man can trigger social identity threat, undermining women’s performance. Scientists have done studies. They know these things.

        • T. J. Babson said, on August 4, 2013 at 7:08 pm

          Good one.

      • Michael LaBossiere said, on August 6, 2013 at 5:03 pm

        There is actually some rather clumsy and grotesque sexism present in the field. Creepy, too. I used to think that professional philosophers would live up to professionalism. I still want that to be true, but know it is often not.


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