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
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.”

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