Financial Services and General Government Appropriations Act, 2008

Floor Speech

FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS ACT, 2008 -- (House of Representatives - June 27, 2007)

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Mr. DAVIS of Illinois. Mr. Chairman, I want to thank Chairman Serrano for yielding to me. I appreciate the opportunity to work with the gentleman from New York on this issue.

As the chairman of the Subcommittee on the Federal Workforce Postal Service and District of Columbia, I look forward to working closely with my colleagues on issues within our subcommittee's jurisdiction.

In 1971, Congress made the Postal Service self-sustaining. However, Congress continued to subsidize the mailing cost of the blind, nonprofit organizations, local newspapers, and publishers of educational material. It did so by providing an appropriation to the Postal Service to cover the revenues it had given up or ``foregone'' by charging below cost rates to these groups. Appropriations for these subsidies increased as postage rates and the number of nonprofits grew, approaching $1 billion annually in the mid-1980s.

In the early 1990s, Congress did not appropriate enough to cover these costs and refused to let the Postal Service invoke its statutory right to raise rates to cover the shortfall. The Postal Service pleaded that providing social subsidies was not part of its mission, hindered its competitiveness, and was more regressive than taxation with its impact.

The Revenue Forgone Reform Act of 1993 eliminated appropriations to support reduced rates for nonprofits, which effectively transferred the costs to other mailers. The Act retained free postage only for the blind and for overseas absentee ballot materials. Appropriations for subsidizing that narrow purpose have been in the range of $60 million to $100 million each year.

The 1993 Act also provided for an annual payment of $29 million each year for 42 years to pay off the debt accumulated in the early 1990s. Congress has appropriated this amount every year from 1994 through 2006, even though the President's fiscal year 2005 and fiscal year 2006 budgets proposed to eliminate the payment. Failure to fund this authorized appropriation places the remaining debt of more than $800 million at risk of nonpayment which would significantly increase postal costs. In addition, not providing funds for these services over time will require the Postal Service to record these obligations as a bad debt and will unfairly transfer these costs to postage ratepayers whose costs have already increased due to the recent rate determinations by the Postal Rate Commission.

It is important to note that Congress entered into this arrangement and has covered the $29 million each year without fail since the 1993 Revenue Foregone Act was enacted. By reneging on our obligation, we place the fiscal well-being of the Postal Service at risk. We also send a signal that Congress will not stand behind free mail for the blind and overseas absentee balloting materials, something we should not be doing.

For the record, I note that in addition to our subcommittee letter to the Appropriations Committee requesting that the $29 million in revenue foregone reimbursement be restored, a number of postal stakeholders echoed the request: Postal labor unions and management, the Alliance of Nonprofit Mailers, and the postmaster general all want the revenue foregone payment honored.

I ask the chairman: Will the chairman support restoring this important funding when the bill goes to conference with the Senate?

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