House GOP leaders went on defense Monday with their controversial proposal to cut Saturday postal delivery to create savings that could keep the Highway Trust Fund from going broke this summer.
In a memo to fellow Republicans entitled “Setting the record straight,” the leadership argued: “This isn’t the first time the Postal Service has had to change its delivery practices. Facing financial problems in 1950 the Postal Service ended twice-a-day at home mail delivery.”
They also warned that most House Republicans won’t like the alternatives being considered on the other side of the Capitol, where “senators are currently discussing a list of approximately 10 user fees and tax increases.
“The most popular, apparently, is to impose a tax on oil at the wholesale level—which essentially is a way of imposing a new gas tax at the front end of the process,” declares the memo sent out by Majority Whip Kevin McCarthy.
The GOP proposal to cut most Saturday postal service to rescue the highway fund has been widely panned by congressional Democrats and outside conservative groups since it was first floated in a leadership memo to Republican House members 10 days ago.
Most of the criticism has centered on depictions of the plan as no more than a budget accounting trick because it depends on averting some hypothetical future Postal Service bailout as real money now to replenish the highway fund for one year.
The GOP response to that criticism comes in the new memo circulated by McCarthy, also labeled as coming from Speaker John Boehner and Majority Leader Eric Cantor.
“Absent a transfer into the Highway Trust Fund, in late July/early August there will be insufficient funds to reimburse states for ongoing highway construction projects,” the memo warns.
The dilemma stems from the fact that 90 percent of the fund’s revenue comes from the 18.4-cents-per-gallon federal tax on gasoline and the 24.4-cents-per-gallon tax on diesel, neither of which has been increased since 1993. Over that 21-year period, motor-vehicle fuel efficiency has increased significantly—meaning motorists are using far less fuel—and the fund has not kept pace with rising construction costs.
“Projects across the country may stop as a result,” states the memo.
The memo then says that getting through another year of highway construction—“so we have the space to complete a multi-year highway bill”—will require a transfer into the Highway Trust Fund of approximately $12 billion. Their idea of cutting back Saturday postal deliveries, the GOP leaders have argued, could provide $10 billion over 10 years by averting a bailout of the struggling Postal Service.
The Republican leaders insisted in the memo that the plan “does NOT take any money from the Postal Service,” and they defended the accounting behind it.
“Under the unified budget (the deficit figures everyone cites), a savings to the Post Office reduces the deficit. That reduction in the unified deficit is offsetting the transfer to the Highway Trust Fund,” the memo argues.
They also note that post offices would remain open on Saturdays both to receive and process mail; that post-office boxes will receive mail on Saturdays; and that packages will still be delivered along with medicine and priority and express mail.
“No postal employees will be fired as [a] result of this change,” the memo says. “Natural attrition and voluntary buyouts of retirement eligible employees will enable the Postal Service to begin right-sizing its workforce.”
And they note that, “[a]bsent a change in the law to permit the Postal Service to go to modified six-day delivery, the Postal Service will have to make even bigger changes elsewhere; these would likely include higher postal rates and the closing of additional facilities.”
“It still sounds like Obamacare-style double counting,” responded Dan Holler, a spokesman for Heritage Action, one of the conservative groups that have criticized the idea.
On the Democratic side, Rep. Gerald Connolly of Virginia wrote in a “Dear Colleague” letter last week that attempting to project budget savings through “counterfactual claims based on averting events that may or may not take place in the future is soothsaying, not budget scoring.”
Meanwhile, the Postal Service itself remains careful in its comments. The Washington Post reported that Postmaster General Patrick Donahoe—who has pushed to eliminate most Saturday delivery of letters as part of a larger, more comprehensive reform effort—reaffirmed on Monday in an interview that he favors cuts to six-day delivery—even if it is part of a highway fund bailout plan.
Senate Finance Chairman Ron Wyden of Oregon says his committee members plan to sort out their “preferred” options to address the Highway Trust Fund shortage this week, and hope to have legislation ready before the Fourth of July break.
On Wednesday, Wyden is to be among the speakers at a “Rally for Roads” event at Union Square near the Capitol, where he is to talk about potential solutions.
This article appears in the June 9, 2014 edition of NJ Daily as Defensive House Leaders Push Postal/Highway Plan.