The flip-flop by Congress on electronic delivery of federal benefits payments epitomizes policymaking at its worst.

Some on Capitol Hill acknowledge that lawmakers acted hypocritically when they ordered the Treasury Department to convert most government payments to direct deposit by 1999 and then bashed the agency for scaring low-income and elderly recipients of Social Security and welfare checks.

"We gave them (Treasury) this sucker punch," a Democratic staff member on the House Banking Committee said. "That was one helluva mandate."

Others offer a kinder explanation: Lawmakers changed their minds because consumers complained about giving up checks and paying high bank fees to get their money.

The little-noticed mandate was signed into law in April 1996 as a money saver to help pay for the Debt Collection Improvement Act. It required all government payments-excluding tax refunds-to be made electronically by Jan. 1, 1999. Electronic delivery was predicted to save Uncle Sam $500 million over five years.

In retrospect, proponents underestimated the social and business obstacles that the law would face. Consumer advocates immediately asked how the roughly 10 million recipients who lack bank accounts would receive their payments.

The accounts also became reelection fodder for politicians such as Senate Banking Committee Chairman Alfonse M. D'Amato. "Under the administration's plan, senior citizens, veterans, and needy individuals who receive government benefits would be subject to paying several fees each and every time they needed to withdraw money," he said in May 1997 and repeated for more than a year. "For the federal government to allow billion-dollar banks to bilk the most vulnerable in our society is unconscionable."

In response, the Treasury took advantage of exemptions in the law and made electronic delivery voluntary. Critics say that decision will diminish government savings, as will the Treasury's proposal last week to pay $12.60 for each government-designed account that financial institutions offer to benefits recipients who lack their own accounts.

Treasury officials respond that the savings will simply be delayed-as successive generations will become more comfortable with banking electronically.

But the program is still wrapped up in politics. Sen. Paul S. Sarbanes, the ranking Democrat on the Banking Committee, and allies have counted concerns about the program among reasons for blocking the nomination of John D. Hawke Jr.-the Treasury's point man on electronic payments-to be comptroller of the currency.

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