Postal myths: #2 The USPS isn’t part of the federal government

Earlier this week we dealt with the popular belief that because the US Constitution mentions post offices, it would take a constitutional amendment to eliminate or privatize the USPS. Today we have the flip side of that myth- the belief that the US Postal Service isn’t part of the federal government. You see this in news stories often- FedSmith ran a column just a week ago referring to the USPS as a “quasi-governmental entity”, that had been privatized in 1971! The Gallup Organization, which was responsible for the poll we reported earlier today naming the USPS the best-liked government service, referred to “the quasi-governmental U.S. Postal Service” in an earlier poll report. A recent story in the Atlantic claims that “Postal services were quasi-privatized in the US decades ago”. Just to make things interesting, the Washington Post’s Ed O’Keefe once referred to the USPS as “a quasi-federal outfit”– whatever that means!

Most of the quasi-confusion can be traced back to the 1971 Postal Reorganization Act, which eliminated the old Post Office Department, replacing it with the US Postal Service. The act was intended to make the USPS self-financing from its own revenues, and to make it an independent, non-political public service. Prior to the PRA, postmasters (including the postmaster general) were political appointees; rates were set by Congress, and the POD had to go through the appropriations process to get the money it needed to operate.

The PRA established a Board of Governors who were responsible for selecting the PMG and setting policies and budgets. It allowed the USPS to use its revenue to finance its operations without any appropriation process. It set up a separate commission to set postage rates.

What it didn’t do was privatize the postal service in any way, shape or form. Some in Congress, then as now, would have favored privatization. Consideration was also given to making the USPS a government owned corporation, like the TVA or Amtrak. But neither of those things happened. Here’s what the Act says:”The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States”. It also defines the USPS as “an independent establishment of the executive branch of the Government of the United States”. Being “independent” doesn’t make the USPS a “quasi-” anything- it simply means it is not part of one of the cabinet departments. Other “independent” agencies include the CIA and NASA.

In a footnote to its most recent report on postal finances, the Congressional Research Service, part of the Library of Congress, had this to say:

The USPS often is mischaracterized as a quasi governmental or private entity. It is neither. The USPS is a government agency that was created by Congress to achieve various public purposes. Federal law defines what products and services the Postal Service may offer. Additionally, the USPS’s employees are federal employees who participate in the Civil Service Retirement System, the Federal Employees Retirement System, and the Federal Employees Health Benefits Program.

The Supreme Court has even weighed in on what being “independent” means for the USPS, in an opinion from 2004:

The PRA’s designation of the Postal Service as an “independent establishment of the executive branch of the Government of the United States,” 39 U. S. C. §201, is not consistent with the idea that the Postal Service is an entity existing outside the Government. Indeed, the designation indicates just the contrary. The PRA gives the Postal Service a high degree of independence from other Government offices, but it remains part of the Government.

That would seem to settle it, wouldn’t it?

  • YONKERS_NY

    .gov is used for USPS employees only

  • charlie baker

    I used to personally know a post office worker who worked for the USPS for thirty years, and he would tear your ears off to hear you say the service is a government agency. He is adamant it was privatized in 1971. The fellow has since retired and moved away, but I used to enjoy arguing with him about this.

  • alex vranescu

    They did this because now instead of using taxpayer money to the Department now they can take from the Department profits or take money from the basket. The same way they’re doing with Social Security. The company makes billions a year in profit but! We’re still broke because how Congress passes laws they we have to give money here and there. Was still broke will never change and I will still get a pay cut. 9 years I got a total of 7$payout. And trust me the Union is very happy with this why? Because now the post office with my pay cut can I wore postal employees more postal employees mean more union dues. Put that in your article

  • littlebuddy12345

    If the carriers are federal employees, then it seems it would still be a government entity. Unless we have a bunch of federal employees, working for a privatized business? Doesn’t make sense.

  • boilerluv

    I think your poor friend had some sort of mental disability. 🙁

  • Lee Walter

    USPS has been operating in the red for 11 years in a row. 2017 isn’t any different.
    How do American’s think they keep their doors open? A normal corporation would have closed their doors. Tax payers dollars given to them. Private corporations do not have this luxury (not this much help).

  • USPS employee.

    Dear Lee, you’re misinformed my friend. USPS is a independent agency of US government. We do not take your precious tax money. Please do some research. You would be surprised. I had same opinion before i started

  • Lee Walter

    You are wrong. Go back and read what the USPS is….

  • Lee Walter

    “We do not take your precious tax money”. LOL USPS was set up to run without much tax payer money funneled to them.
    BUT operating in the red means they have become a money pit for tax payers.

  • postalnews

    USPS was “set up” to run with no taxpayer money, and continues to do so. Does USPS “operate in the red”? Technically, yes. Since 2006, the USPS has been obligated to pay around $5 billion a year into a trust fund for future potential retiree health benefits. For most of that time, USPS has been unable to make those payments.

    Since the payments are legal obligations, USPS takes a charge for the full amount of the payment, even though no money actually changes hands. That accounts for virtually all of USPS debt since 2006, when USPS was debt free.

    So, yes, the USPS ha piled up billions of dollars in “debt” ON PAPER since 2006. But all of it is strictly ON PAPER. The USPS continues to have no problem paying its operating expenses, including its retirees’ health benefits, WITHOUT any taxpayer funds.

  • Lee Walter

    Stop spreading propaganda…the postal service as a self sustaining agency is a joke. They are bloodsuckers forever linked to the taxpayers wallets.

  • postalnews

    OK- give us a source for your assertion. If USPS is being propped up by taxpayer funds, then there is a law, passed by Congress, appropriating those funds.

    Cite it.

  • William Cunningham

    The USPS has been receiving tax payer funded subsidies to fund the pension plan since the early 1980’s. It is not operated as a privet funded corporation nor has it ever.

  • postalnews

    And can you tell us what piece of legislation provides for those “subsidies”?

  • http://www.redstateeclectic.com AngelaTC

    Shall we start with the tax exemptions the USPS gets?

  • postalnews

    Why not? Complaining about “tax exemptions” the USPS supposedly enjoys is pretty easy to deal with. Not paying taxes would certainly be an issue if the USPS really WAS some kind of quasi-private corporation. But of course it isn’t

    The USPS is owned, and paid for, by the American people. Taxing the USPS would simply raise taxes on the people who use the USPS- meaning most Americans. You might as well tax the National Park Service, or the Veterans Administration, or the Air Force.

    The only benefit to taxing the USPS would accrue to its competitors. Those companies’ fiduciary responsibility is to their investors, not, as is the case with USPS, to the American people.

  • Steve Tunis

    You do realize you just admitted it is owned and PAID FOR by the people right???

  • postalnews

    This comes as a surprise to you? Why?

  • Sara Robinson

    Is everyone out looking for more ways to bash the Postal Service or does no one have anything to back up their complaints? This was just getting interesting.

  • Sara Robinson

    consider it a subsidiary. Owned by the people, just like the Federal Government, but not ran the same.

  • Oops

    Aliens, did it.

  • Susan Pilgrim

    So, how come you get to be opened and get paid while our Military has to suffer and not get paid? Doesn’t make much sense since you don’t go out and fight and they do. Explain that bs theory. BTW, USPS sucks. I sent a letter out of Woodland Park, CO. to FL, got there in 4 Days. That same item I sent back that I ordered came from Fl, sat in Denver, CO for 4 days. Took 16 days to get to me. Maybe you don’t think your ratings are low, but I do. And if they weren’t so low, then how come most of them open at 10 am close for lunch from 1-2 and final close at 5. And why bother to be open on Saturdays if you are only open for 2 hours?

  • Kristy

    So, next time deliver it yourself. See how much it costs you to do compared to the 47 cents USPS charges.

  • Paul

    Why would USPS shut down when its paying its employees with money it generated on its own? Also, you should think about the fact that a huge percentage of USPS employees are former military. Thanks for supporting the vets lady and maybe do some homework before spouting off like this.

  • Icorps1970

    So who writes your paycheck? Does it say “US Treasury Dept” by any chance?

  • Icorps1970

    How do they pay the retirees if they are not paying into the fund? HOW? WHO is REALLY paying the retirees and when does the fund run dry since USPS is not paying anything into it? Where does the money paid out to the retirees come from and do the checks say “US Treasury” or US Postal Service? If they say US Treasury you are lying to the readers here.

  • Icorps1970

    Do the checks say “USPS” or do ANY OF THEM, employees or retirees come from the treasury?

  • postalnews

    As it happens, postal employees don’t receive Treasury checks, and haven’t for years. Not that it matters- under the original law that created the USPS, all of the money it receives is deposited in the Treasury’s Postal Service Fund. The law also provides that all money in that fund is appropriated to the USPS to pay its expenses. The appropriation is a permanent part of the law that created the USPS, so there is no need for Congress to make an annual appropriation in order for the USPS to have access to its money.

    Retirees are paid by OPM, the same as any other federal retiree. The money to pay postal retirees comes from their payroll deductions, along with the employer contribution which is paid by the USPS from USPS revenue.

    When you ask “How do they pay the retirees if they are not paying into the fund?”, I assume you’re talking about the Retiree Health Benefit Fund. That is a totally different account that was set up to pre-fund future retiree health benefits. Current retiree’s pensions and health benefits are paid for out of current USPS revenues and employee contributions.

  • Crsandont Wantto

    More importantly… Why does the Federal Reserve call itself Federal? It is privately owned and operated and internally regulated and does not answer to anyone in the so called “Government” and yet it has been Robbing Americans for over a hundred years and no one seems to care?

  • darkhorse

    yes… also, why is Fed Ex called Federal? LOL!! The federal Reserve is a cabal of Jewish International banksters – it is this group that created the Internal Revenue Dept. as their collection Agency…I’m not kidding when I call this country the United States of Israel! Our troops are and have been fighting the Jewish wars in the Middle East so the Jews can control the entire ME. Israel and the Geo W Bush Admin neocons perpetrated 911 to provide and excuse to start bombing the ME. They want Syria for the gas and oil pipeline and of course, crypto Donald, is helping them.

  • Kellie Renee

    No my checks DO NOT say us treasury on them .. have not for over 17 years. Learn first before you spew nonsense. USPS is a independent agency

  • Kellie Renee

    No my checks DO NOT say us treasury on them .. have not for over 17 years. Learn first before you spew nonsense. USPS is a independent agency… maybe if you were informed you could make a comment that made sense

  • Kellie Renee

    You my sir are misinformed

  • Daniel Patrick Roche

    I find this post to be willfully dishonest. Reorganization WAS a step towards full privatization. That was the whole point of it. After the 1970 mass postal strikes, Congress and the Nixon administration reorganized the post office to be more anti-worker. They replaced its traditional agency structure with a flat out private corporate structure, which is inherently anti-worker, and moved it to an independent ststus when it used to be a full member of the Executive Branch. If those aren’t steps toward privatizing the service, then such steps just do not exist.

    And the comparison to other independent agencies is just laughable. NASA and the CIA both get direct funding from the USG and are therefore at least somewhat directly accountable to the people and their representatives. This is not true of USPS and they routinely point this out in their marketing as a selling point. And within the company USPS admits this makes them less accountable to the public to their employees.

    I think people overstate the case that there isn’t something fuzzy about the relationship between USPS and the government because they see it as a wedge that can be used in the debate to advance, not start, the privatization process. This is a mistake, especially if you care about postal workers. USPS is infamous for its toxicity as an employer in large part due to corporatization. We should highlight that and fight it, not help USPS management spin the nebulous structure of the org to please whatever audience it wants.

  • Susan L Maher

    The postal service lost 15.9 billion in 2012 followed by 5.3 and 4.8 billion in 2014 and 2014.Fortune magazine did a study and says the postal service costs taxpayers at least 18 billion a year.Mostly through salaries that far exceed comparable private sector salaries and production increases that lag far behind the private sector.

  • postalnews

    Cite your source. (And no, “Fortune says” is not a source citation). The USPS doesn’t receive taxpayer dollars (disagree? again, cite your source- what law appropriates taxpayer money for the USPS) , so it would be impossible for USPS salaries or productivity to have any impact on taxpayers.

  • Kenny T.

    Your post office sucks, but mine hasn’t messed up in the 50 years I’ve been using it. It’s ridiculous and ignorant to make such a blanket claim based on your personal experience.

  • Kenny T.

    Let’s get to the bottom of why so many conservatives are misinformed about the USPS. The primary reason is because they want to paint a narrative that all business run under the U.S. government is crap, and they’ll even cite their USPS mishaps to paint the entire system as unreliable. God forbid you tell them that even FEDEX and UPS fails to deliver mail from time to time. They just won’t hear it. The USPS was doing so well that it destroyed the Republican narrative – so they forced the USPS to fund workers’ pensions way in to the future, a conservative-generated crisis to make it appear that the USPS is perpetually in the hole.

  • Richard_Ran

    Actually privatize the whole sordid thing and let customers be the judge of this “service”. Problem solved.

  • Macpappy

    Sorry Snowflake, the last shutdown was from Shummer.

  • Jim Steel

    Hey Paul!
    If they are former vets, hope they did a better job defending our nation than processing packages–they suck and have bad attitudes.
    Should be privatized and have better performance standards.

  • Jim Steel

    Hey Kristy:
    A donkey could deliver letters better than the post office–they suck like you and Paul–you two probably work there.

  • Johnnie Martin

    I use and support the USPS

  • Arva Larva

    Brian: Calm down in the exclamation points to help your credibility.

  • postalnews

    Hmmm… After 20 years of doing this, I think I’m all set for credibility, thanks! Always good to hear from anonymous commenters with nothing to add to the conversation though!!!!!!!!!!!!!!!!!!!!!

  • xGarthx

    Yeah, postage would be around $1 per package and you’d pay UPS prices.

  • xGarthx

    $1.50 per letter*

  • Gordon Wieland

    Thank you for your informative post on whether USPS is privatized or a government agency. You spoil your reputation, though, when you express your highly questionable views in this response to Susan Pilgrim. I agree that Susan Pilgrim’s rant is silly. But you are mistaken in stating: “Shutdowns are brought to you by Donald Trump and the GOP majority in Congress.” Democrats have also “brought” us shutdowns. See: https://www.washingtonpost.com/news/wonk/wp/2013/09/25/here-is-every-previous-government-shutdown-why-they-happened-and-how-they-ended/?utm_term=.02f6b9794a79

    Also, your claim that your “solution” solves the problem is no solution. One of the major reasons for shutdowns is divergence of “willing[ness] to borrow.” Ergo, there is no such thing as “don’t appropriate more money than you … are willing to borrow.” Agreement on how much that should be would be necessary. I stand with Rand Paul. Do you? Do all the senators and congressional representatives?

  • postalnews

    You’re wrong- please note that I was speaking in the present tense. We currently have one party rule in Washington, so the party in charge is responsible for forcing a government shutdown. Gerald Ford and Jimmy Carter have nothing to do with it. (I’d also point out that Trump’s “negotiating” style is effectively that of a terrorist. Rather than propose a compromise, he threatens to blow up the government if he doesn’t get everything he wants.)

    Once the Democrats reassert control in the House, and pass a clean funding bill, a Trump veto (or defeat in the GOP run Senate) will still result in Trump and his toadies bearing responsibility for a continued shutdown.

    While the debt limit is not involved in the current Trump shutdown, your comment on borrowing is also wrong. You say “there is no such thing as “don’t appropriate more money than you … are willing to borrow.” Agreement on how much that should be would be necessary.”

    Well, ummm…, yes it would be. And Congress DID agree on how much that would be when they passed the debt limit. And then they still went ahead and appropriated more money (AND slashed taxes on the wealthy) without coming up with the revenue to fund that additional spending.

    That’s my point. The debt limit is a phony issue.

  • Gordon Wieland

    My apologies. I didn’t know you are so grammatically challenged that you think using the present tense somehow changes the fact that when you say “shutdowns are brought to you” you are speaking of shutdowns in general, not any particular shutdown. And shutdowns in general includes all shutdowns, even Jimmy Carter’s.

    As far as the issue with the debt limit, I guess I should have backed up and asked exactly what problem it is that you claim to have solved. You certainly haven’t solved the problem of borrowing–unless, of course, you mean you are in favor of unlimited borrowing, which is a foolishly short-term viewpoint rather than a real solution.

  • Motorcitymadman

    USPS lost another package… In the last three months they have completely lost one, it gone never gonna get it, and 3 that were 2 day shipping that have been delayed more then 3 weeks. They suck. Lets privatize them completely or just get rid of them. They only bring me junk mail and lose my packages.

  • Eric Carr

    The USPS should be eliminated. Private companies just do it better and they actually turn a profit. I don’t think anyone would care if UPS became the official mail carrier in the US. Or Fed Ex. Or whomever. Postal workers can get jobs elsewhere, in actual productive industries.

  • Danksta TheOG

    Actually WE would care. UPS does a terrible job at delivering packages in a timely fashion and care. You clearly don’t use these services. USPS is better than UPS and Fedex combined.

    Just because you don’t use the service doesn’t mean it should be eliminated. Millions rely on the postal system and it’s a very good system.

  • Chris Neilson

    I respectfully disagree. I live in a rural area and make lots of online purchases. UPS and FedEx are always more dependable than the USPS and almost always on time. With the USPS I’ve had lost items, damaged items, and
    Priority Mail items the did not arrive on time. And no, weather or Christmas wasn’t a factor.

  • Jim Towne

    Why do they lose billions every year? My carriers now have cell phones in their ears blabbing as they misdeliver your package. Ain’t it great.

  • neutronJK

    Perhaps you’re not aware that UPS and Fedex won’t deliver to many thousands of locations across this country because they are remote and delivery to them wouldn’t be profitable. So what happens when you ship something to rural Alaska or Wyoming via Fedex? Fedex air freights it to athe nearest large city then pays the USPS to deliver it. Just another example of private industry relying on government services to get the job done. And no, I am not a USPS or federal employee.

  • neutronJK

    You obviously haven’t been watching what the UPS and FedEx drivers do when they deliver your packages.

  • Jim Towne

    Yeah I have and the lose billions every year. Go ahead talk to me.So poorly run. If true independent companies lost that kind of money. They would be gone.

  • neutronJK

    I hate to get partisan here, but there is no way to explain what’s happening without doing that. Republicans in Congress begin with the assumption that any service run by the government will be inefficient and they take every opportunity to tell people that. And then they set about making it look that way by doing things like:
    1. Making the postal service deliver to every mail address in the US while allowing USP, FedEx, DHL and the others deliver to costlier routes using the USPS. In short, they help private companies pass their expensive and money-losing routes off to the government.
    2. They forced the USPS to fully fund all potential pension liabilities for workers in advance, but were careful to ensure that the same rule didn’t apply to FedEx and the others.
    In short, they say that the USPS is inefficient, then they stack the deck to reinforce that notion.
    Let’s make FedEx and UPS deliver to every address in the nation and fully fund their pension obligations in advance. Then let’s see who is most efficient.

  • Jim Towne

    Well in the interest of partisanship UPS and FedEx do deliver to every address in the U.S. UPS and FEDEX both tried to get into the mail aspect on their own but were denied do to the MONOPOLY USPS has on what is deemed mail. They can get into the package but the 2 previously mentioned can’t get into the mail. What both private companies garner as mail are sorted and bulk delivered to USPS distribution facilities to be sorted and delivered. Neither company picks and chooses what addresses or zip codes they will take. They actually help USPS on the delivery side by dropping it at the distribution facility. Without that business USPS would be in a bigger mess. As far as pensions the threat of insolvency and employee loss of all retirement monies forced the government to push the issue. Again as simple economics would dictate truly private companies working in such a negative aspect…well they would history not bailed out.

  • neutronJK

    Do the research, Jim. They do NOT deliver to every address in the US. Show us even one verifiable instance where either UPS or Fedex tried to get into the mail delivery business. If you want to hate the USPS or the government, be my guest. Live with your delusions.

  • Jim Towne

    I will say 20 plus years ago thus their bulk mail services were created which is picked up UPS and FEDEX sorted, moved, and delivered to USPS facilities where the end delivery is by USPS.Delusional I think not. By the way they deliver to every valid street address in the U.S. Do your research.

  • Jim Towne

    This guy above says it every time about not delivering to every address. UPS and FEDEX deliver to every physical address out there. USPS on the other hand only delivers to PO boxes in remote areas. Must be a postal worker.

  • Jim Towne

    You are wrong again. The services that you talk about are surepost and smartpost. They are designed to be delivered by the post office utilizing a slower service. Both companies deliver to every physical address if shipped thru standard UPS and FEDEX ground delivery. Look it up.

  • Jim Towne

    Just used priority mail to ship documents 200 miles away. After going from California to the East Coast and back it was finally delivered a week later. 2 days in a row my home deliveries have been delivered by my neighbors as the regular mail has been misdelivered. This was not junk mail these were bank statements and insurance forms…..

  • neutronJK

    Jim,
    If you visit just about any farmers forum site, you will note that they say UPS and FedEx deliver to some areas (often through contractors rather than regular delivery employees) and in many cases, they deliver only to the nearest Post Office where the recipient must go to pick up the parcel.

  • Jim Towne

    Depending on level of service USPS delivers the end product when it is surepost or smartpost which is designed to be delivered by USPS. UPS delivers to every address and contracts no one. FedEx home delivery are all contract drivers and deliver as they see fit.. FedEx ground delivers all of their packages through their own operation. Contractually speaking they deliver to every address. FEDEX HOME calls their own shots. Fedex Home is not really FedEx. They contract those drivers to be the end delivery. Not fulfilling that obligation is a contract violation.

  • postalnews

    Eric is one of those people who has a theological need for everything to be run for the profit of the elites. Nothing in the Constitution requires the USPS to “turn a profit”. If people are happy with the USPS (as they seem to be), then it should be allowed to continue as it currently exists.

  • Mom Sandie

    It isn’t passed off from FedEx to the USPS just in rural areas. This happens a lot here in suburban Minneapolis, MN too.

  • Leah

    They have a union.

  • Leah

    I have plenty of complaints backed up from my neighborhood. Neighbors reported to me their issues and I represented them to the OIG and the post office involved. In less than a month – I received 60 complaints! Some were theft and tampering – and the rest were some serious delivery issues. Not talking about the occasional misdelivery to your neighbor – REAL issues.

  • Tammi L

    I hope you all realize IF they privatize the USPS, you won’t be mailing letters at anything close to $0.55; that price would probably triple or quadruple to have the “private” company profitable. Be careful what you wish for.

  • Jorge Linares

    usps better than ups and fedex… That was a good joke.

  • PrinceHarming

    If it’s not necessary to ‘turn a profit’ shouldn’t it at least break even? We are charged a fee per transaction, unlike other government services which are funded through taxes. Shouldn’t there be Some level of accountability for waste, fraud and abuse?

  • postalnews

    Two separate questions-

    1- Should the USPS be required to break even?

    Sure- if that’s what the people want.There’s no constitutional impediment to the federal government subsidizing USPS if Congress chooses to.

    2. Shouldn’t there be Some level of accountability for waste, fraud and abuse?

    Sure- and there is. Postal employees are bound by all the rules and laws that apply to other federal employees, in addition to specific postal related rules.

  • richard davidson

    I went for a interview with the USPS. The first thing were told is that the USPS was “NOT” a federal government agency.

  • Craig Guthrie

    The USPS is a perfect example of why government involvement in free-market business simply does not work, especially in combination with a worker’s union slowly killing the business from within as well. Just like humans meddling with nature always backfires, the same applies to the natural order of a free market.

    As the author here states, Congress does not specifically appropriate funds to keep the USPS, despite the fact that it is obviously bleeding to death. This does not mean the USPS does not burden the tax payer in any way. What Congress does do, is allow the USPS to forward fund pensions very far into the future. There are people that haven’t even BEEN BORN YET, let alone hired by USPS yet, for which the USPS has borrowed against their pensions. WTF is right. No private business would ever be able to do this to stay afloat. Not to mention plenty of other business benefits bestowed on the USPS by the Fed, such as, being able to borrow at very favorable rates, many tax breaks, and having restrictions on any other companies being able to handle 1st class mail.

    The concept that all of the above is acceptable for the purpose of keeping the price of a stamp low and flat-rate, makes zero sense. The fact that a letter delivered to the remote Alaska wilderness or the tribe that lives at the bottom of the Grand Canyon, only accessible via a 20 mile round-trip mule tow, cost the same as a letter mailed across town, is absurd. The USPS should be privatized and operate at a break even minimum, like any other American business. If that isn’t possible, another more efficient entity will take it’s place, just like every other market in the private sector.