Postal Updates

Congress’ habit of raiding USPS coffers goes back almost 30 years

Jun 16, 2020, 2 PM
For the better part of 30 years, Congress has taken money from the United States Postal Service because, in the words of a former chairman of the Postal Rate Commission (now the Postal Regulatory Commission), “the Postal Service is there.”

Washington Postal Scene — By Bill McAllister

Postmaster General Anthony M. Frank came to Washington, D.C., in 1988 with a mandate to run the United States Postal Service like a business.

That’s why the former California savings and loan executive was furious when he discovered that millions of postal dollars were being spent without his approval.

What angered Frank was that Congress viewed the Postal Service as a cash cow, syphoning off postal revenues to balance the federal budget.

John Nolan, a former deputy postmaster general, said: “The USPS has always been leery about going to Congress because you never know what twists and turns will take place to wind up putting you in a worse position than when you started.”

“There is so little understanding of the USPS and the Mailing Industry on the Hill and the actions from the Hill usually reflect that lack of understanding,” he said.

Lawmakers and presidents alike seem to have a habit of dipping into the postal till.

It doesn’t happen often, but when it does, it can be a doozy, knocking postal budgets into the red and undermining mail service.

Party doesn’t seem to matter. Democrats and Republicans alike have been unable to resist the lure of postal revenues.

Here are three examples of how lawmakers in Washington have raided the supposedly independent Postal Service.

In the late 1980s, Frank was so upset that lawmakers decided to tap the USPS for about $800 million that he launched a successful campaign to get the USPS taken “off the federal budget.” The postmaster general won that symbolic point, arguing that “we don’t use a penny of tax money.”

But the change in the Postal Service’s budgetary status to “off budget” didn’t change much in Washington.

If anything, Neal Denton, former executive director of the Alliance of Nonprofit Mailers, said the change actually might have made the USPS “an easy target” for money raiders.

Even when the dollars can be earmarked for a postal-related cause, the fact that postal dollars are no longer in the USPS’s accounts can wreak havoc at postal headquarters.

That’s what’s happening with what some consider the latest and most serious raids.

It is something that the George W. Bush administration demanded be added to a 2006 postal law.

Postmaster General John E. “Jack” Potter wanted the change so badly that he endorsed a law authorizing the latest raid.

What Bush demanded was that the USPS “pre-fund” the entire expected $55 billion in healthcare costs for tens of thousands of postal retirees. It was a requirement no other federal agency has faced.

No problem, Potter thought. Postal revenues were soaring at the time, and the $5.5 billion a year in payments could easily be met.

Then came the 2008 recession, and revenue from mail delivery suddenly plummeted.

The USPS plunged into red ink when it repeatedly failed to make the required $5.5 billion a year payment for retiree health benefits.

In all, the Postal Service has missed $33.9 billion in retiree payments, creating what Postmaster General Megan Brennan has described as a “very serious, but solvable” financial situation.

Congress has ignored the pleas of Brennan’s predecessors for years. Whether lawmakers will come to the Postal Service’s aid remains unclear.

Sometimes lawmakers have promised to help the Postal Service financially, but suddenly have cut off the promised money.

That’s what happened in 1993, when Congress approved paying the USPS $29 million annually to subsidize the reduced rates for nonprofit mail. The 1993 law would have required taxpayers to provide the USPS a total of $1.2 billion over 42 years. But lawmakers skipped or cut the payments for four years, leaving the USPS with a $1.6 billion IOU.

A report by the USPS inspector general hinted that the USPS might declare that sum as a loss.

But the inspector general also said because the USPS “does not have the authority to change legislation,” it “must work with Congress” to secure any missing funds.

Why does Congress take such actions against the Postal Service? Edward J. Gleiman, the former chairman of what was called the Postal Rate Commission (now the Postal Regulatory Commission), said the problem is as old as the Postal Service. “From the beginning of time members of Congress have wanted to name post offices, but they haven’t been willing to cough up the money for it.”

That problem has been re-enforced by budgetary procedures that make lawmakers cut portions of the budget in the name of reducing federal deficits.

Although an independent federal organization with most of its accounts “off budget,” there are enough postal items that remain part of the unified federal budget that lawmakers find it convenient to raid the USPS for savings.

As Gleiman puts it: “Why? Because the Postal Service is there.”

The Postal Service has a large budget, and when lawmakers need a way to find the savings to balance the budget “the postal service is there,” he said.

So, lawmakers have no more qualms about pulling funds out of the Postal Service than they do earmarking funds for pet projects in their own districts.

Denton says the money raids are part of “the funny relationship between Congress and the Postal Service.”

On the one hand, the lawmakers “never let USPS close a post office,” he said.

But Congress readily took away $29 million for nonprofit mail, believing it “chump change” in the huge federal budget. In that case, there was no outcry because other mailers had to help subsidize the lower rates that continue to be given some mailers.