A call for taxpayer funding of the U.S. Postal Service

Washington Postal Scene by Bill McAllister

In the midst of the controversies over Postmaster General Louis DeJoy, an astute postal observer in Washington, D.C., has urged an old-time solution to solve the continuing financial dilemma facing the United States Postal Service.

The idea of former USPS executive Stephen Kearney is a simple one: Congress should resume its old method of granting an annual appropriation to the Postal Service.

Kearney, who spent 33 years with the USPS, said in an Aug. 27 essay in Roll Call (a newspaper and website that reports on the U.S. Congress), “This is not a new idea.”

Taxpayer funding was something Congress abandoned with great joy 50 years ago during the Nixon administration. It pushed the old U.S. Post Office Department out of the president’s cabinet and transformed it into an independent establishment in the federal bureaucracy.

Before President Richard Nixon signed the Postal Reorganization Act of 1970, the mail was funded by a mix of postage revenues “and annual appropriations by Congress, acknowledging mail delivery as a public service,” Kearney noted.

Those appropriations were phased out by the 1980s, as the Postal Service entered what Kearney called “the golden age of mail growth.”

In 2006 mail volume peaked at 213 billion pieces, and it has continued to fall since then, to 142 billion pieces in 2019, Kearney said.

“But while the 100 percent mailer-funded model worked well during the boom years of the 1980s and 1990s, it did not work when mail volume declined and public service costs rose,” he said.

What that suggests to Kearney is that Congress needs to recognize that the Postal Service once again needs “hybrid funding by customers and by Congress” to survive.

A first step would be for Congress to “define the Postal Service’s Universal Service Obligation,” Kearney said.

That definition of the universal service obligation should include “everything [the USPS] does that a profit-seeking private sector business would not undertake,” such as the cost of delivering mail to every household six days a week or the operating costs of “thousands of post offices that do not cover their costs,” he said.

Postal regulators should compute the overall cost of the universal service obligation and Congress should fund it, according to Kearney.

Mailers will continue to use the mail “as long as postage rates track the general rate of inflation,” he said.

Kearney, who heads the Alliance of Nonprofit Mailers, warned that mailers will leave the Postal Service if the Postal Regulatory Commission adds several surcharges to the current rate schedule.

He concluded with a bigger warning, “If Congress ignores the need for a hybrid funding solution, the U.S. Postal Service will continue to face problems for years to come — long after its role in the 2020 election and pandemic is complete.”

Several individuals in the postal arena provided comments about Kearney’s idea to Linn’s Stamp News.

Jim Sauber, chief of staff at the National Association of Letter Carriers, said: “It might be workable, but the key is how do you define and measure the USO [universal service obligation]? There are better alternatives.”

Michael Plunkett, president of the Association for Postal Commerce, said “direct governmental funding of USPS is plausible.”

“A lot of posts around the world are compensated by governments for their universal service obligations. In the U.S., for that to happen there probably needs to be a re-examination of exactly what the USO needs to be,” Plunkett said.

Robert Taub, chairman of the Postal Regulatory Commission, noted he has long urged Congress to define the universal service obligation.

“I believe the fundamental issue is first defining the USO and only then can one determine what is the best way to fund the system,” Taub said.

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