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Postal Service Funds Would Go to Highways Under House GOP Proposal

The shift would benefit both motorists and the USPS, Republican leaders argue.

House Republicans are constructing a proposal to keep thousands of roads 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 they are crafting as one that would also work to benefit the Postal Service—by granting its request to reduce Saturday delivery service.

That, members are told, would allow the USPS "to better operate within its own revenue stream" while also providing $10.7 billion in offsets over 10 years that could be used for the trust fund.

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.

"The proposal would still allow for Saturday delivery of packages (including medications) and priority and express mail. Post offices would remain open on Saturdays and there would be no changes for delivery of mail to post office boxes," it states.

"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.