USPS-Mandated by Congress?

[Pedas2]

What is the name of your state? Arizona

Article I, Section 8, Clause 7 of the United States Constitution gives Congress the power and the responsibility: “To establish Post Offices and post Roads.”

Does this mean their must be a USPS? Without Congressional funding, the USPS may become insolvent by September 2020. Does Congress have the legal authority to privatize or sell the USPS to a private company? If so, does the new private company legal have to honor the face value of potentially billions of postage stamps still in circulation?

 

[Taxing Matters]

What is the name of your state? Arizona

Article I, Section 8, Clause 7 of the United States Constitution gives Congress the power and the responsibility: “To establish Post Offices and post Roads.”

Does this mean their must be a USPS?

No. It means only that the Congress is authorized to set up a postal service. The Constitution does not require that Congress do it.

Does Congress have the legal authority to privatize or sell the USPS to a private company?

Yes.

If so, does the new private company legal have to honor the face value of potentially billions of postage stamps still in circulation?

That would depend on the Act of Congress that provided for privatizing the Postal Service.

But I don't see privitization realistically happening. Too many voters would complain about that — especially in rural areas where post offices still play an important function in the local community. And the Representatives and Senators might well lose their free franking privileges if they did that; that's the privilege they have to send official mail from their offices without having to pay postage.

 

[CdwJava]

I think we hear every few years that the USPS is going to become insolvent, and every few years they pass legislation to increase their budget or the USPS raises their rates to try and offset an increase in expenses. They aren't going away anytime soon ... they are likely to simply become more expensive (thereby decreasing use and necessitating additional increases, ad infinitum...).

 

[FlyingRon]

The problem is the USPS is the best and worst of both worlds being a supposed "independent agency." The answer is that it isn't "independent." Congress tinkers in its operation incessantly, often imposing requirements that no commercial carrier would be subject to. And the answer is that it's not insolvent. The mail delivery aspects are self-supporting, including paying up front for retirement which no company nor other federal agency does. The only subsidy is for a few programs that the congress has specifically mandated (services to the blind and some international services). The fallacy that it is independent is that like social security, it's revenues are included in the computation of the gross federal budget to make other programs that aren't anywhere near break even look better.

 

[quincy]

Although the USPS has been operating for years on a multibillion dollar deficit, it’s finances are suffering more right now. The USPS relies on business mailings and, with business closings due to Covid-19, mail volume and revenue has dropped significantly.

The USPS has a “universal service obligation” to provide mail service to everyone at a reasonable rate, 6 days a week. The universal service obligation is described here in this 2015 USPS document: https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-15-001_0.pdf

The House version of the CARES Act included a $30 billion “bailout” for the Post Office but this was changed to a lending line of $10 billion in the final Senate draft. The USPS is now asking
for $75 billion.

Currently around here, mail is not being delivered every day. Postal carriers are not required to deliver mail 6 days a week if hazardous conditions exist. If the USPS was permitted to continue in this “crisis mode” after the virus is contained/controlled, and the number of days of paper mail delivery could be reduced from 6 days a week to 5 days a week (keeping 6-day package deliveries), it would go a long way to helping reduce their operating costs.

 

[Taxing Matters]

The problem is the USPS is the best and worst of both worlds being a supposed "independent agency."

Neither Congress nor anyone else familiar with how the USPS operated has ever said it it was independent. Rather the mandate from Congress is that the agency supposed to be self-sufficient, i.e. run its operations solely on its own revenues and thus without funding from the general treasury.

The fallacy that it is independent is that like social security,

I've never heard anyone claim Social Security as an agency is either independent or self-sufficient. It is neither. The programs that SSA administers are supposed to be entirely funded by the FICA taxes Congress imposes. The false notion that many Americans have is that this money is put into some sort of account for them like a private pension plan. That's not how it works nor has it ever worked that way. The issue for SSA is that future projections show that FICA taxes will not be sufficient to cover SSA programs and that is the source of the looming Social Security "crisis".

 

[FlyingRon]

I didn't say that. I said that thing like the USPS revenues and the SS trust funds are used to play games with the federal debt numbers. That is definitely true. Further, despite your protestations, the USPS in 1970 is was supposed to be (by the reorg act) an independent agency of the executive branch. While setting fees was vested in a board of governors, Congress has felt free to stick its fingers into other aspects of the operation. You can argue that indeed they aren't (and possibly shouldn't have been expected to be) independent, but that's not what the law that establishes the current agency says.

 

[quincy]

There are several reasons why the USPS continues to operate at a deficit. One reason is that their price for services is tied by law to the consumer price index. Another reason is that the USPS is limited to investing its pension funds in US Treasuries. And another reason is demand for service is lower.

It is not making enough money, in other words, to perform the services it is required by the universal service obligation to perform.

Reform is needed if the USPS is to survive long term - but that is easier said than done.

 

[FlyingRon]

Not only does it constrained how to invest, it's required to prepay the pensions. Nothing else in the federal government (and certainly not the private sector) is so constrained.

 

[quincy]

I don’t think anyone believes the USPS is not a necessary service and there are several different changes that could be made to keep it operating (e.g., excuse debt, reduce days of operation, increase prices, offer buyouts to senior workers ...).

But it would take Congress to agree to act and I don’t have a whole lot of faith in Congress.

 

[Taxing Matters]

I don’t think anyone believes the USPS is not a necessary service

There are those who believe, however, that the government should not be in the business of providing that service.

 

[quincy]

There are those who believe, however, that the government should not be in the business of providing that service.

Yes. Yes there are.