[Congressional Record Volume 144, Number 46 (Thursday, April 23, 1998)]
[Senate]
[Pages S3535-S3536]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COCHRAN:
  S. 1972. A bill to reform the laws relating to Postal Service 
Finances, and for other purposes; to the Committee on Governmental 
Affairs.


                THE POSTAL FINANCING REFORM ACT OF 1998

  Mr. COCHRAN. Mr. President, today I am re-introducing a bill that I 
originally introduced last fall--the Postal Financing Reform Act of 
1998. This bill is designed to do three things: allow the Postal 
Service to deposit funds in private sector institutions, invest in open 
markets--with Treasury approval of investment choices, and allow the 
Postal Service to borrow from private credit markets.
  For almost two decades now, the Postal Service has been self-
supporting. With a yearly budget near $60 billion, and just $100 
million appropriated to provide free mailing for the blind, free 
overseas voting, and reduced postage rates for certain nonprofit 
mailers, continuing U.S. Treasury control over Postal Service banking, 
investing, and borrowing is no longer necessary or justified. 
Nonetheless, when I first introduced the Postal Financing Reform Act 
last fall, specific concerns were raised by some in the postal 
community, and I agreed to make changes that were suggested. The Postal 
Financing Reform Act of 1998 incorporates these changes. Specifically, 
the revised 1998 Act reverts back to existing law bill language that 
would have potentially allowed the Postal Service to invest in its 
private sector competitors, and to benefit from an increased borrowing 
ceiling at the U.S. Treasury.
  Current law prevents the Postal Service from obtaining the most 
favorable combination of prices and services and results in added 
operating costs. Under this new approach, the Treasury Department would 
retain much of its current oversight, but it would no longer be the 
sole provider of certain financial services to the Postal Service.
  The Postal Financing Reform Act of 1998 proposes four significant 
changes to current law. First, section two of the bill amends Title 39 
of the U.S. Code to authorize the Postal Service to deposit its 
revenues in the Postal Service Fund within the U.S. Treasury or any 
Federal Reserve banks or depositories for public funds. The requirement 
to obtain the Secretary of the Treasury's approval before any funds be 
deposited elsewhere would be eliminated, just as this approval is no 
longer necessary for other quasi-public agencies like the Tennessee 
Valley Authority (TVA).
  Section three continues the provision of existing law which requires 
that the Secretary of the Treasury approve any investments the Postal 
Service may make in non-Government securities. At the same time, it 
would permit the Postal Service to invest in U.S. Government 
obligations on its own accord, without unnecessary constraints, thus 
enabling the Postal Service to take advantage of favorable conditions 
in the Government securities market.
  Section four removes the control of the Secretary of the Treasury 
over the Postal Service's financial borrowing decisions. The Postal 
Service would still be required to consult with the Secretary regarding 
the terms and conditions of the sale of any obligations issued by the 
Postal Service under section 2006(a) of Title 39, and the Secretary 
would still exercise a power of approval over the timing of a sale of 
obligations.
  Finally, section five of the bill removes the ability of the Postal 
Service to require the Secretary of the Treasury to purchase Postal 
Service obligations. It merely permits the Secretary of the Treasury to 
buy Postal Service obligations upon the Postal Service's request.
  I have heard from many sources that reforms in the Postal Service 
should be made. Though I have decided to refrain from undertaking 
comprehensive reform, I have selected instead a simple, straightforward 
correction of an out of date practice that would reduce costs and help 
hold down future rate increases, without increasing risk to the 
taxpayers.
  Those who believe the Postal Service should operate as efficiently as 
possible, thus reducing fees charged to consumers, should support this 
bill. So, too, should those who profess to see the Postal Service 
treated more like a business.
  I think it is time to act on this issue. I invite Senators to 
consider this proposal for reform and support this effort to ensure a 
more efficient and financially sound U.S. Postal Service.
  Mr. President, I ask unanimous consent that additional material be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    Section-by-Section Analysis--Postal Financing Reform Act of 1998


                         section 1. short title

       The short title of this Act is the Postal Financing Reform 
     Act of 1998.


      section 2. end of treasury control of postal service banking

       This provision would amend 39 U.S.C. 2003(d) by enabling 
     the Postal Service to have sole discretion to deposit its 
     revenues in the Postal Service Fund within the U.S. Treasury 
     or any Federal Reserve banks or depositories for public 
     funds. This amendment enables the Postal Service to deposit 
     its funds as it deems appropriate, and take advantage of 
     banking and other modern financial services in the open 
     market that are unavailable from the Treasury Department.

[[Page S3536]]

                 section 3. postal service investments

       This amendment to 39 U.S.C. 2003(c) ensures continued 
     oversight of any non-Government investments made by the 
     Postal Service. It continues the provision of existing law 
     which requires that the Secretary of the Treasury approve any 
     investments the Postal Service may make in non-Government 
     securities. At the same time, it would permit the Postal 
     Service to invest in U.S. Government obligations on its own 
     accord, without unnecessary constraints, thus enabling the 
     Postal Service to take advantage of favorable conditions in 
     the Government securities market.


   section 4. elimination of treasury preemption of borrowing by the 
                             postal service

       This amendment to 39 U.S.C. 2006(a) removes the control of 
     the Secretary of the Treasury over the Postal Service's 
     financial borrowing decisions. The Postal Service, however, 
     must consult with the Secretary of the Treasury for a 
     reasonable period of time, as determined by the Postal 
     Service, regarding the terms and conditions of the sale of 
     any obligations issued by the Postal Service under section 
     2006(a). The specification of a ``reasonable'' time, rather 
     than a specific number of days, is intended to ensure that 
     the consultation process is concluded in a commercially 
     reasonable time, and does not unduly restrict the borrowing 
     flexibility of the Postal Service. The Secretary will 
     exercise a power of approval over the timing (but not the 
     other terms) of a sale of obligations. At the end of the 
     consultation period, the Postal Service may proceed to issue 
     obligations to a party other than the Secretary, and the 
     Secretary cannot block such action, regardless of whether the 
     Secretary has approved such third-party sale. This provision 
     should allow the Postal Service to minimize interest expense 
     by obtaining the most cost efficient service available.


      section 5. elimination of postal service ``put'' on treasury

       Section 2006(b) of Title 39 allows the Postal Service to 
     require the Secretary of the Treasury to purchase obligations 
     of the Postal Service up to a limit of $2 billion. The 
     amendment removes the ability of the Postal Service to 
     require the Secretary of the Treasury to purchase Postal 
     Service obligations. It merely permits the Secretary of the 
     Treasury to buy Postal Service obligations upon the Postal 
     Service's request. Removing this ``put'' on the Treasury will 
     be consistent with the purpose of directing the Postal 
     Service borrowing to the private sector where it will be able 
     to take advantage of a broader market, albeit with the 
     requisite constraints.
       Since the decision to buy is at the discretion of the 
     Secretary of the Treasury, there is no longer a need to place 
     a dollar limit on the amount of Postal Service obligations 
     that the Treasury can purchase. The total limit on Postal 
     Service debt in Section 2005 should apply.


                       section 6. effective date

       This Act will become effective 90 days after enactment.
                                 ______