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?

          • 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.

  • 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.