The Check is Not in the Mail: Obama Administration to Start Direct Deposit

What's better than getting a check from the government? Not much, except maybe getting that money via direct deposit.

On Monday the Obama administration will announce that all payments from the government will now be made to consumers electronically, ABC News has learned.

Americans receiving payments for Social Security, unemployment insurance, veterans benefits, railroad retirement, and government benefits will now find the money automatically deposited into their personal bank accounts. Americans without bank accounts can get paid using the Treasury Department's Direct Express Debit MasterCard program.

Why the shift to direct deposits? Two reasons: one, it will be easier and faster for consumers to get paid and, two, it will save taxpayers money – an estimated $303 million over the first five years and about $120 million each year after that.

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For instance, despite repeated attempts to get recipients to convert to electronic payments, the Treasury Department still mails out more than 136 million benefit checks each year. Now, as part of President Obama's effort to eliminate waste and modernize government for taxpayers, that will change with Monday's announcement of a complete shift to direct deposits.

"[The] announcement is a win-win for the American public because it makes government more convenient and cost-effective while generating significant savings for the country," said Office of Management & Budget director Peter Orszag. "This is precisely the type of smart, streamlined improvement that this administration is committed to making across government to boost efficiency and modernize how we do business."

While savings of a few hundred million dollars a year might sound impressive, though, remember that just last month the government ran up $135 billion in red ink.

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The administration will make the direct deposit announcement on Monday when Treasury publishes a notice of proposed rulemaking in the Federal Register to begin a 60-day period of public comment. Once the final rule is published, the administration will roll out the changes with a public education campaign.

The new rule will primarily take effect in March 2011, with a few exceptions that will not take effect until March 2013.

To some extent, the shift to direct deposits began years ago. 85 percent of federal benefit recipients already receive their payments electronically. One million Americans are now using the Direct Express payment system, launched in the summer of 2008.

Video of President Obama talking about job numbers.
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