http://www.businessweek.com/news/2014-05-28/money-losing-post-office-said-to-be-highway-fund-target

Bloomberg News

Money-Losing Post Office Said to Be Highway Fund Source

May 28, 2014

Raising the U.S. gasoline tax is out as a way to shore up the Highway Trust Fund. So is taxing drivers based on the number of miles they clock. A plan to use taxes on companies’ overseas profits hasn’t gone anywhere.

So House Republicans are now turning to the money-losing U.S. Postal Service.

Unusual as it may sound, possible savings from revamping the agency’s operations are on the table as one way to patch highway funding, said two Republican legislative aides with knowledge of the talks.

“The long-term financial prospects of the Postal Service are fairly grim, so the idea that you could take money from that and not further exacerbate one problem in order to try to do a temporary Band-Aid on the other one borders on bizarre,” said Scott Lilly, a former staff director of the House Appropriations Committee. He’s now a senior fellow at the Center for American Progress, a policy group aligned with Democrats.

The Postal Service lost $1.9 billion in the quarter ending March 31 while the fund supporting the nation’s highways, bridges and transit may run short of money to pay its bills as soon as July, according to the U.S. Transportation Department.

The Congressional Budget Office projected in April that when the 2014 fiscal year ends on Sept. 30 the trust fund’s highway account will contain only $2 billion, half of what it had at the end of the previous year.

Several Ideas

Tapping savings from Postal Service changes is one of several ideas being considered to bolster the highway fund, the aides said, speaking on condition of anonymity. Passing a highway bill is a priority for Congress this year.

“Encountering a situation where the trust fund can’t pay its bills on time is not an option,” said Janet Kavinoky, the U.S. Chamber of Commerce’s top transportation lobbyist. “So they’ve got to solve this problem one way or another before leaving for August recess.”

Fuel taxes, paid every time a driver fills up the tank with gasoline or diesel, flow into the highway trust fund.

Since 2008, the fund has run short as Americans drive fewer miles and use more fuel-efficient vehicles. Congress in the past has bailed it out with money from the U.S. Treasury’s general fund.

One benefit of funds from the Postal Service: Its spending is considered “off budget,” as the agency supports itself through postage sales.

Saturday Delivery

Ending Saturday mail delivery would save about $20 billion over 10 years, according to a December analysis by the Committee for a Responsible Federal Budget, a fiscal advocacy group.

Allowing the Postal Service to increase the cost of stamps faster could raise $5 billion to $10 billion, while increasing insurance premiums for postal workers could raise about $10 billion, the organization said, citing Congressional Budget Office analyses.

Postal labor unions have questioned the potential savings from cutting Saturday mail delivery, saying it could put the post office in a death spiral by sacrificing revenue and ceding business. The four postal unions have formed a coalition to oppose that plan.

“Using an American institution to pay for the Highway Trust Fund is simply ludicrous,” said Jeanette Dwyer, president of the National Rural Letter Carriers Association. “The Postal Service is paid for by the American public by stamps for revenues. We do not take any taxpayer money.”

Retiree Benefits

The Postal Service lost $5 billion in its most recent fiscal year with most of its losses in recent years stemming from a congressional requirement that it pay now for the costs of health benefits for future retirees. The service has sought to end Saturday delivery and raise rates higher than inflation to increase its revenue to cover its losses.

“This legislative maneuver makes no sense,” said Fredric Rolando, president of the National Association of Letter Carriers. “Congress doesn’t fund the Postal Service, which earns its own revenue by selling stamps. Moreover, cutting Saturday delivery, door delivery or whatever else is envisioned, would hurt residents, businesses and the Postal Service itself.”

A two-year bill setting spending levels for the Highway Trust Fund expires in September, leading lawmakers to focus on how to pay for road and bridge improvements in coming years.

Obama Plan

The White House released its plan earlier this month with President Barack Obama speaking alongside the aging Tappan Zee Bridge north of New York City about his four-year, $302 billion highway plan.

Like congressional Republicans, Obama has dismissed the idea of raising the gas tax, which was last increased in 1993.

Postal cuts have been floated as a way to cover the cost of several initiatives in the past two years such as rolling back reductions in veterans’ benefits, extending long-term unemployment insurance and balancing spending deals. Looking for unrelated ways to offset the cost of such bills -- seeking a “pay-for” in congressional parlance -- has become commonplace as Republicans oppose raising taxes.

Looking to Postal Service cuts to plug the transportation spending hole emphasizes the situation’s gravity, Lilly said.

“They’re looking desperately under every pot and crevice to come up with some money to pay for an extension of the trust fund,” he said in a phone interview. “They will have a terrible message to take home to their constituents this fall if they don’t find it.”

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net; Derek Wallbank in Washington at dwallbank@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net Laurie Asseo


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