Postal Service Funds Would Go to Highways Under House GOP Proposal

Leading Senate Democrat calls plan strange and unworkable.

LOS ANGELES, CA - SEPTEMBER 29: The closed 405 freeway is eerily empty during Carmageddon on September 29, 2012 in Los Angeles, California. The 405 Freeway is completely shut down for a 10 mile stretch this weekend for the demolition that is part of a larger $1-billion freeway improvement project. (Photo by Gina Ferazzi-Pool/Getty Images)
National Journal
Billy House
Add to Briefcase
Billy House
May 30, 2014, 2:56 p.m.

House Re­pub­lic­ans are con­struct­ing a pro­pos­al to keep thou­sands of road and trans­it pro­jects from grind­ing to a halt this sum­mer by trans­fer­ring funds in­to the na­tion’s nearly de­pleted High­way Trust Fund from the already money-los­ing U.S. Postal Ser­vice.

But in a memo to rank-and-file House GOP mem­bers dated Fri­day, Speak­er John Boehner and his top two lieu­ten­ants cast the plan as one that would also work to be­ne­fit the Postal Ser­vice — by grant­ing its re­quest to cut most de­liv­ery ser­vice to five days a week.

Un­der the plan, first-class mail and bulk mail de­liv­er­ies — like cata­logs and ad­vert­ising cir­cu­lars — would be elim­in­ated on Sat­urdays. 

That, mem­bers are told, would al­low the USPS “to bet­ter op­er­ate with­in its own rev­en­ue stream” while also provid­ing $10.7 bil­lion over 10 years that could be used to off­set a one-year ex­ten­sion of the high­way trust fund.

The pro­pos­al would still al­low for Sat­urday de­liv­ery of pack­ages (in­clud­ing med­ic­a­tions) and pri­or­ity and ex­press mail. And post of­fices would re­main open on Sat­urdays.

On Sat­urday, Sen. Bar­bara Box­er, D-Cal­if., chair of the Sen­ate En­vir­on­ment and Pub­lic Works Com­mit­tee, char­ac­ter­ized the House Re­pub­lic­an lead­ers’ idea as “a strange plan” and “un­work­able.” 

“In­stead of work­ing with Demo­crats to come up with a sens­ible user fee which has been the found­a­tion of the High­way Trust Fund, House Re­pub­lic­an lead­er­ship pro­poses cut­ting back mail de­liv­er­ies to Amer­ic­an house­holds,” she com­plained.

And at least one con­ser­vat­ive group, Her­it­age Ac­tion for Amer­ica, has already come out against the idea.

“The idea Con­gress would use a sup­posedly self-fund­ing agency that can­not pay its bills as a piggy bank to fund an­oth­er bank­rupt, self-fund­ing fund is ab­surd,” said Her­it­age spokes­man Dan Holler.

But Fri­day’s memo from Boehner, Ma­jor­ity Lead­er Eric Can­tor, and Ma­jor­ity Whip Kev­in Mc­Carthy says, “We firmly be­lieve that this is the best way to en­sure con­tin­ued fund­ing of high­way pro­jects in a fisc­ally re­spons­ible man­ner that im­ple­ments a needed struc­tur­al re­form to a grow­ing fed­er­al li­ab­il­ity.”

“As you may be aware, as a res­ult of lower than an­ti­cip­ated rev­en­ues in­to the High­way Trust Fund, the [fund] will re­quire an ad­di­tion­al trans­fer of funds pri­or to the Au­gust Dis­trict Work Peri­od,” the memo says in ex­plain­ing the ur­gency of find­ing a solu­tion. “Fail­ing to provide ad­di­tion­al funds would mean a dis­rup­tion of on­go­ing con­struc­tion pro­jects — right in the midst of the con­struc­tion sea­son.”

In fact, some es­tim­ates are that as many as 700,000 jobs would be lost over a year un­less the trust fund is re­plen­ished. The fund has run to­ward in­solv­ency be­cause its primary rev­en­ue source is the fed­er­al ex­cise tax on gas­ol­ine and dies­el sales, which cur­rently is 18.4 cents a gal­lon for gas­ol­ine and 24.4 cents for dies­el. But those rates were set in 1993. Since that time, mo­tor-vehicle fuel ef­fi­ciency has in­creased sig­ni­fic­antly and the fund has not kept pace with rising costs.

Based on Con­gres­sion­al Budget Of­fice es­tim­ates of rev­en­ues and spend­ing con­tinu­ing at cur­rent levels, an ad­di­tion­al $14 bil­lion to $15 bil­lion would be needed for a one-year ex­ten­sion of the trust fund, the memo says.

But un­der cur­rent House Rules, the GOP lead­ers write, a trans­fer of gen­er­al funds in­to the High­way Trust Fund must be off­set.

“Giv­en the lim­ited win­dow for ac­tion, we be­lieve it is im­port­ant that an off­set be simple and have the sup­port of the Ad­min­is­tra­tion and Con­gres­sion­al Re­pub­lic­ans,” they write, adding, “We are pre­par­ing a pro­pos­al that would com­bine a move to mod­i­fied six-day postal de­liv­ery along with a short-term ex­ten­sion of the high­way bill that places the ne­ces­sary re­sources in­to the Trust Fund to pre­vent a dis­rup­tion of high­way pro­jects.”

In a ques­tion-and-an­swer sec­tion at­tached to the memo, the is­sue of tak­ing money from the Postal Ser­vice is presen­ted in a pos­it­ive light — even though the ser­vice cur­rently un­der­funds its own re­tir­ee be­ne­fit costs, and po­ten­tially needs tax­pay­er bail­outs to cov­er op­er­at­ing losses such as 2012’s $15.9 bil­lion short­fall.

Ac­cord­ing to the Q&A, one po­ten­tial pro­pos­al would be to end the de­liv­ery of first-class mail, cata­logs, ad­vert­ising cir­cu­lars, and oth­er lower-pri­or­ity mail on Sat­urdays.

“Ad­opt­ing this pro­pos­al would save $10.7 bil­lion over the next ten years,” the memo says, adding that this modi­fic­a­tion could be used to off­set the high­way fund pro­grams.

“It is a real­ist­ic off­set be­cause Pres­id­ent Obama’s FY 2015 budget also re­com­mends ter­min­a­tion of Sat­urday mail de­liv­ery by the USPS,” states the Q&A.

In ad­di­tion, it says such a postal re­form “would help fore­stall a fu­ture fed­er­al bail­out of the Postal Ser­vice by en­abling the USPS to bet­ter op­er­ate with­in its own rev­en­ue stream.”

“This is a real sav­ings for the gen­er­al fund of the treas­ury (in the form of re­du­cing the size of a fu­ture bail­out),” it says.

But in her state­ment Sat­urday re­spond­ing to the GOP pro­pos­al, Box­er called the idea “a clas­sic ex­ample of House Re­pub­lic­ans not plan­ning for a short­fall we have known about for years.”

What We're Following See More »
Republican Polling Shows Close Race
Roundup: National Polling Remains Inconsistent
8 hours ago

The national polls, once again, tell very different stories: Clinton leads by just one point in the IBD, Rasmussen, and LA Times tracking polls, while she shows a commanding 12 point lead in the ABC news poll and a smaller but sizable five point lead in the CNN poll. The Republican Remington Research Group released a slew of polls showing Trump up in Ohio, Nevada, and North Carolina, a tie in Florida, and Clinton leads in Pennsylvania, Wisconsin, and Virginia. However, an independent Siena poll shows Clinton up 7 in North Carolina, while a Monmouth poll shows Trump up one in Arizona

Colin Powell to Vote for Clinton
11 hours ago
Clinton Reaching Out to GOP Senators
16 hours ago

If you need a marker for how confident Hillary Clinton is at this point of the race, here's one: CNN's Jeff Zeleny reports "she's been talking to Republican senators, old allies and new, saying that she is willing to work with them and govern."

Trump Admits He’s Behind
16 hours ago
Ron Klain in Line to Be Clinton’s Chief of Staff?
16 hours ago

Sources tell CNN that longtime Democratic operative Ron Klain, who has been Vice President Biden's chief of staff, is "high on the list of prospects" to be chief of staff in a Clinton White House. "John Podesta, the campaign chairman, has signaled his interest in joining the Cabinet, perhaps as Energy secretary."


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.