H.R. 2309, Postal Reform Act of 2011

Cost Estimate
March 29, 2012

As ordered reported by the House Committee on Rules on March 26, 2012

H.R. 2309 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 to five days per week;
  • Transfer about $11 billion in surplus retirement contributions from the Civil Service Retirement and Disability Fund (CSRDF) to the Postal Service Fund;
  • 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 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. 2309 would aim to help the Postal Service reduce its costs and increase its income.

CBO estimates that enacting the bill would result in off-budget savings totaling about $28 billion and on-budget costs of about $8 billion over the 2012-2022 period. (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 and CSRDF are on-budget.)

Combining those effects, CBO estimates that the net savings to the unified budget from enacting H.R. 2309 would be about $20 billion over the 2012-2022 period. All of those effects reflect changes in direct spending. Enacting H.R. 2309 would not affect revenues. Pay-as-you-go procedures apply because enacting the legislation would increase on-budget direct spending.

In addition, CBO estimates that H.R. 2309 would affect spending subject to appropriation. Assuming that future appropriations for the Postal Service are reduced consistent with the bill’s provisions, we estimate that implementing H.R. 2309 would yield discretionary savings of $980 million over the 10-year period.

H.R. 2309 would impose intergovernmental and private-sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on some groups of mailers by increasing postage rates.

The bill also would impose an intergovernmental mandate on the state of Alaska by requiring the state to reimburse the USPS for costs it incurs to provide bypass mail service in Alaska. Assuming that the requirement on Alaska is enforceable, CBO estimates that the costs of complying with the intergovernmental mandates in the bill would exceed the annual threshold established in UMRA beginning in 2015. CBO projects that the intergovernmental threshold in 2015 will be $77 million, as adjusted for inflation.

CBO estimates that the costs to the private sector to comply with the mandates would fall below the annual threshold for private-sector mandates established in UMRA ($146 million in 2012, adjusted annually for inflation) in the first five years the mandates are in effect.