CBO estimates that enacting H.R. 756 would reduce direct spending by about $6 billion over the 2017-2027 period

06/02/2017

The Congressional Budget Office has published the score for H.R. 756, Postal Service Reform Act of 2017. While it will reduce spending, the future of postal reform remains uncertain.

Effects on the Federal Budget

CBO estimates that enacting H.R. 756 would reduce direct spending by about $6 billion over the 2017-2027 period; therefore, pay-as-you-go procedures apply. Enacting H.R. 756 would not affect revenues.

The total changes in direct spending over the 2017-2027 period are split between net off-budget savings of about $6.2 billion and net on-budget costs of about $0.2 billion. (USPS cash flows are recorded in the federal budget in the Postal Service Fund and are classified as off-budget, while the cash flows of the other accounts affected by H.R. 756 are classified as on-budget.)

In addition, CBO estimates that implementing H.R. 756 would lead to discretionary savings of $0.3 billion over the next 10 years, subject to appropriation actions consistent with that estimate.

CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.

Effects on State, Local, and Tribal Governments, and on the Private Sector

By increasing postal rates for public and private entities, H.R. 756 would impose intergovernmental and private sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on public and private entities that send certain mail through the Postal Service. Additionally, the bill would impose a private-sector mandate on some postal annuitants by requiring them to enroll in Medicare, if eligible. CBO estimates that the annual cost to public entities of increasing the postal rates would exceed the threshold established in UMRA for intergovernmental mandates ($78 million in 2017, adjusted annually for inflation) in each of the first five years after the rates become effective. CBO also estimates the aggregate annual cost to private entities of complying with the mandates would exceed the threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation) in each of the first five years the mandates were effective.

H.R. 756 would change the laws that govern the operation of the Postal Service (USPS), restructure how the federal government pays for health benefits for federal employees and annuitants, and alter how the federal government calculates the contributions that agencies make for retirement benefits. Major provisions of the bill would:

  • Permit the Postal Service to raise rates on certain mail categories (direct spending savings of $8.6 billion);
  • Authorize the Postal Service to phase out delivery of mail directly to business customers’ doors (direct spending savings of $2.0 billion);
  • Establish a new health benefits program for Postal Service employees, annuitants, and their dependents (net direct spending costs of $4.5 billion and discretionary savings of $1.9 billion); and
  • Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits, (net direct spending costs of $0.1 billion, and discretionary costs of $1.5 billion).