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?

  • stargood

    I think part of the confusion might be caused by the fact that the Post Office’s website URL is http://www.usps.com, not http://www.usps.gov (usps.gov does redirect to usps.com though). The dot-com would seem to imply to some people that it is a private company, which of course it is not.

    • 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.

    • boilerluv

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

  • 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.

    • Sara Robinson

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

  • Lee Walter

    USPS has been operating in the red for 11 years in a row. 2017 isn’t any different (double digits in the red I think).
    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

        “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.
        (USPS is part of the Executive branch. They are not an independent outside entity. Government is government. AND they are government.)

        • 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”?

          • 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?

          • Kellie Renee

            You my sir are misinformed

          • 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.

          • 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.

          • 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.

      • Icorps1970

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

        • 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

        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

  • 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.

  • 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

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

    • 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.

  • 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.

  • 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.

  • 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.