Postal Cutback to Fund Highways Called a Gimmick by Foxx

Photographer: Andrew Harrer/Bloomberg

U.S. Transportation Secretary Anthony Foxx has asked Congress to pass legislation to repair U.S. highways and bridges. Close

U.S. Transportation Secretary Anthony Foxx has asked Congress to pass legislation to... Read More

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Photographer: Andrew Harrer/Bloomberg

U.S. Transportation Secretary Anthony Foxx has asked Congress to pass legislation to repair U.S. highways and bridges.

U.S. Transportation Secretary Anthony Foxx called on Congress to pass long-term legislation to repair U.S. highways and bridges, saying President Barack Obama’s administration views a short-term patch tied to Postal Service reductions as a gimmick.

“You’ve got to get past gimmicks in transportation and try to get serious about getting a long-term strategy done,” Foxx told reporters after meeting with Democrats in the U.S. House of Representatives today.

The Highway Trust Fund may run short of money to meet obligations as early as July as the gasoline and diesel-fuel taxes that finance the program haven’t kept up with the pace of new projects. House Republican leaders last month outlined a plan to reduce the Postal Service’s mail delivery as the main method of keeping the highway trust solvent until May 2015.

Such a plan, which would stop delivery of most mail on Saturday except packages, would save $10.7 billion over 10 years, House Speaker John Boehner and other leaders said in a May 30 memo.

The Obama administration opposes the idea because it doesn’t think the plan would save the highway fund or the Postal Service, Matt Lehrich, a White House spokesman, said in an e-mail.

Not ‘Serious’

“The House Republican plan does not represent a serious approach to either reforming the Postal Service or addressing the problem facing the Highway Trust Fund,” he said. “While we share the overarching concern about the need to avoid postal insolvency while maintaining high-quality universal postal service, the House Republican plan is neither sufficient nor appropriate to achieve those goals.”

The Obama administration on April 29 sent legislation to Congress proposing $302 billion for road and mass transit projects over four years, with part of the funding coming from new taxes on company earnings overseas. The administration has proposed cutting Saturday mail delivery in its budgets as part of returning the Postal Service to solvency.

Representative Xavier Becerra of California, chairman of the House Democratic Caucus, said the Republican proposal is an unfair trade-off.

“This is another case of Republicans saying it’s a zero-sum game,” Becerra said today. “In order for one American to win, another American has to lose.”

Mail Delivery

Splitting with Foxx, U.S. Postmaster General Patrick Donahoe said today he’s open to the Republican proposal. The Postal Service expects it would save $2 billion annually by ending Saturday letter delivery and the Highway Trust Fund would benefit as well because of budget transfers, he said.

If Congress doesn’t act, the Postal Service would have to make more cuts, he said. The service lost $1.9 billion in the quarter ending March 31.

“There are additional steps that we would take from a cost-reduction standpoint going forward,” Donahoe said in an interview with Bloomberg News reporters and editors in Washington. “At this point, we are holding out hope that we will get the legislation.”

Donahoe said the service would reduce more mail-processing plant capacity, lower the number of employees and consider delivering mail to so-called cluster boxes rather than directly to the door.

Darrell Issa

The postal-highway swap proposal is being led by Representative Darrell Issa, a California Republican who is chairman of the House committee overseeing the Postal Service. Some Republican House members today said after a closed-door meeting on the topic that they don’t know how they’ll vote.

“It really is a way of pulling your finger out of one hole in the dike and putting it in another,” Wyoming Republican Cynthia Lummis said in an interview, saying she is undecided. The case Republican leaders made, she said, is that highway funding to fix roads after the worst winter in a generation is the more urgent need.

“Clearly the American people would not support shutting down projects that are under way in the states,” Issa said in an interview. “So there has to be a temporary funding mechanism. This happens to be the one that is available to us.”

It’s more urgent to pass a postal revamp this year because Issa will be wrapping up his term as chairman of the House Oversight and Government Reform Committee, Donahoe said. While Issa and Donahoe haven’t always agreed on what should be done, the lawmaker has made postal changes a priority.

Gas Tax

The Highway Trust Fund may not be able to meet its financial obligations as early as July, according to the Transportation Department.

The federal fund, which reimburses states for construction projects, is financed by an 18.4 cent-per-gallon gas tax that hasn’t been raised since 1993. Finding election-year consensus on a revenue increase is emerging as one of this year’s top challenges in Congress.

Obama and congressional leaders agree that raising the tax isn’t an option.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, last week called the postal-delivery offset idea a “head-scratcher.” Senate Environment and Public Works Committee Chairman Barbara Boxer, a California Democrat, also has rejected assuming cost savings from the Postal Service.

Short-Term ‘Patch’

House Republican leaders say the one-year infusion they propose would come as lawmakers pursue a broader debate over a long-term extension of federal highway and mass transit programs. In both chambers, there is bipartisan agreement that a short-term “patch” for the fund is needed in coming weeks.

If the swap is approved, the Postal Service would use its windfall to buy new vehicles to replace some of its aging fleet that averages about 7 miles a gallon and buy new mail-processing equipment to replace machines that date back almost 40 years, Donahoe said.

One Tea Party-aligned group has mocked the idea of using cost savings from curbed mail service to help pay for highways.

“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,” Heritage Action spokesman Dan Holler said in an e-mail.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Derek Wallbank in Washington at dwallbank@bloomberg.net; Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net; Romaine Bostick at rbostick@bloomberg.net Joe Sobczyk

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