H.R. 2748, Postal Reform Act of 2013

Cost Estimate
June 23, 2014

As ordered reported by the House Committee on Oversight and Government Reform on July 24, 2013

H.R. 2748 would change the laws that govern the operation of the United States Postal Service (USPS). Major provisions of the bill would:

  • Permit the Postal Service to reduce mail delivery from six days per week to five;
  • Authorize the Postal Service to phase out delivery of mail directly to some customers’ doors;
  • Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits;
  • Reduce the contribution made by the Postal Service for employees’ health and life insurance premiums;
  • Change the payments that the Postal Service is required to make relating to the Postal Service Retiree Health Benefits Fund (PSRHBF); and
  • Eliminate annual appropriations made to the Postal Service for free and reduced-rate mail.
  • In addition, other provisions of H.R. 2748 would aim to help the Postal Service reduce its operating costs and increase its revenues.

    CBO estimates that enacting the bill would result in off-budget savings of $23.6 billion over the 2015-2024 period and on-budget costs of $6.6 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 PSRHBF are on-budget.) Nearly all the off-budget savings derive from two provisions—reducing mail delivery to five days per week and phasing out delivery to customers’ doors for some (but not all) addresses.

    Combining those effects, CBO estimates that the net budgetary savings from enacting H.R. 2748 would be $17.0 billion over the 2015-2024 period. All of those effects reflect changes in direct spending. Enacting H.R. 2748 would not affect revenues. Pay-as-you-go procedures apply because enacting the legislation would affect on-budget direct spending.

    In addition, CBO estimates that H.R. 2748 would affect discretionary spending, which is subject to future appropriation actions. We estimate that implementing the bill would have net discretionary costs of $5.2 billion over the 10-year period, assuming the necessary amounts are appropriated. Eliminating annual appropriations to the Postal Service would save about $750 million, which would be offset by costs of nearly $5.9 billion from higher retirement contributions made by federal agencies (although those retirement costs would be offset by higher receipts paid into the Civil Service Retirement and Disability Fund, as shown in the memorandum on Table 1).

    H.R. 2748 contains no intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would impose no costs on state, local, or tribal governments.

    H.R. 2748 would impose a private-sector mandate, as defined in UMRA, on national and state political committees by increasing their postal rates for third-class letters. Based on information from an affected committee and the USPS, CBO estimates that the cost to those mailers would be small and fall well below the annual threshold for private-sector mandates established in UMRA ($152 million in 2014, adjusted annually for inflation).