Leaks in the federal budget

Feds spend at least $890,000 on fees for empty accounts – The Washington Post.  (Every time the federal government sets up a grant, it opens an account.  When the grant money is spent, the account can’t be closed, according to government rules, until a full accounting of the program has been made.  That takes time and money.  So some 13,712 accounts with no money in them still exist, at the cost of $65 per year.)

The IRS paid $11 billion in faulty Earned Income Tax Credits last year.  (Not because taxpayers did anything wrong but because the rules for the EITC are so complicated that IRS officials calculated them incorrectly.)

In $75 billion program to prevent mortgage defaults, 46% of participants are defaulting.

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  • The EITC thing doesn’t surprise me at all. When I looked through the 1040 instructions this year, it was about ten pages of instructions and forms to fill out (cue the Whitehall Street scene from Alice’s Restaurant) for people who are at the bottom of the economic ladder. Go figure that it doesn’t get done right.

    Same thing for the mortgage assistance. It’s an interesting fact that about the same proportion of mortgages fall through as have grants for solar power and electric cars—about half the recipients of solar/alternative energy grants and loans, and about half the recipients of alternative automotive grants appear to be going bankrupt. It’s as if government specializes in picking bad business plans.

  • DonS

    Although everyone claims to want tax simplification, we keep supporting the addition of more and more tax credits and deductions, with phase-outs based on income, each of which requires a separate form and worksheet to calculate amounts and eligibility. It’s nuts.

    As for the bank fees issue, this is just more evidence of how hard it is to end a government program, and how much these programs cost over and above the delivered benefits. You, the taxpayer, work hard for that money, but the government didn’t, and consequently doesn’t really care about the poor stewardship.