How Does the Postal Service Pay Its Bills?

Answers to your questions about the news.
July 19 2001 6:28 PM

How Does the Postal Service Pay Its Bills?

The U.S. Postal Service projects a deficit of up to $2 billion this year. Given that the USPS doesn't receive any tax dollars from Congress, how will it come up with the extra $2 billion?

Advertisement

Under law, the Postal Service must break even over time, but its revenues need not equal costs every year. So even if it loses $2 billion this year, the Postal Service has enough cash to pay its bills. It's in no danger of going bankrupt. Whenever deficits loom, the USPS hikes rates to cover its losses.

Who runs the Postal Service? In 1970, Congress removed the postmaster general from the president's Cabinet and turned the Post Office Department into the United States Postal Service, operated by an 11-member Board of Governors. Nine members are appointed by the president and approved by the Senate. They serve nine-year terms, and no more than five members can belong to one political party. Those nine members appoint the 10th member, the postmaster general. Then the 10 members select the deputy postmaster general. The Board of Governors approves rate changes after consultation with the Postal Rate Commission, whose five members are appointed by the president and approved by the Senate.

The direct public subsidy for the Postal Service, which came from tax revenues, was phased out in 1983. USPS does receive indirect subsidies from tax revenues, however, which reimburse the Postal Service for the reduced rates it charges to nonprofit organizations and others.

The Postal Service has a legally protected monopoly on the delivery of letters to mailboxes. Eighty percent of its revenues come from mail covered by that monopoly.

Explainer thanks Nancy Pope of the National Postal Museum, former Postal Service economist Charles Guy of the Lexington Institute, and this history of theU.S.Postal Service.

TODAY IN SLATE

The World

The Budget Disaster that Sabotaged the WHO’s Response to Ebola

How Movies Like Contagion and Outbreak Distort Our Response to Real Epidemics

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

Everything You Should Know About Today’s Eclipse

An Unscientific Ranking of Really, Really Old German Beers

Education

Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.

Culturebox

The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

The Shooting Tragedies That Forged Canada’s Gun Politics

  News & Politics
Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
  Business
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
  Life
Lexicon Valley
Oct. 23 2014 10:30 AM Which Came First, the Word Chicken or the Word Egg?
  Double X
The XX Factor
Oct. 23 2014 11:33 AM Watch Little Princesses Curse for the Feminist Cause
  Slate Plus
Working
Oct. 23 2014 11:28 AM Slate’s Working Podcast: Episode 2 Transcript Read what David Plotz asked Dr. Meri Kolbrener about her workday.
  Arts
Brow Beat
Oct. 23 2014 11:34 AM Louis C.K. Crashes a Brad Pitt Interview on Between Two Ferns
  Technology
Technology
Oct. 23 2014 11:45 AM The United States of Reddit  How social media is redrawing our borders. 
  Health & Science
Bad Astronomy
Oct. 23 2014 7:30 AM Our Solar System and Galaxy … Seen by an Astronaut
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.