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45 IRET Congressional Advisory 1 (1995)

handle is hein.taxfoundation/iretcgadv0043 and id is 1 raw text is: IRET June 14, 1995 No. 4 A FIRST STEP IN GOVERNMENT DOWNSIZING: GET THE U. S. POSTAL SERVICE OUT OF THE PACKAGE DELIVERY BUSINESS As they attempt to carry out the promises they made to voters last November, the new majorities in both Houses of Congress are grappling with how to slow significantly the growth of The U.S. Posh government spending. One of delher busing the keys to successful uniquely wa downsizing will be recognizing subsidized ac that in large part the federal merely as a . government has grown so rapidly because it has tried to gonmentac do too much. Many tasks economicj u n d e r t a k e n b y the provided. government - which really means tasks foisted upon the taxpayers who must pay the bills should be scaled back or abandoned: the programs are too costly, create perverse incentives, invade personal liberties, or all of the above. After a generation and a half in which the government's reach has expanded in virtually all areas except national defense, reversing direction will not be easy. To rein in the size of government, federal programs need to be subjected to a series of fair but firm tests. Some of the tests are: Does the program carry out a legitimate function of government? Do the program's benefits outweigh the program's costs? Could the private sector do the same job better? With regard to the last point, an effective strategy for limiting the size of government is to rethink all government programs for which there are well developed private-sector alternatives. In most such cases the government program should be reduced or eliminated because the private sector can do the job better. To illustrate this test by way of an example, why should the U.S. Postal Service, a quasi- governmental organization, be in the business of delivering packages? By no stretch of anyone's imagination can package delivery be seen as a legitimate function of government. Not only is the Postal Service encroaching on private business, it is heavily subsidized in doing so. It is exempt from most taxes. It can 1 Service's package ess is certainly not a eful goverinment- rivity. It is cited lagrant example of tities for which no !tfication can be borrow directly from the U.S. Treasury, which vastly improves its credit rating, enabling it to obtain funds from private lenders at very low interest rates. Many of the governmental regulatory agencies that inspect- and burden - private businesses do not have jurisdiction over the U.S. Postal Service. And if worst comes to worst, it is widely expected that the federal government would bail out the U.S. Postal Service rather than allowing it to go under. There is no good reason for bestowing these federal supports and guarantees on the delivery of packages. None of the arguments that are sometimes made on behalf of one or another government activity applies to the U.S. Postal Service's package delivery. It might be argued that a government-supported agency is needed to deliver packages if private companies were unable or unwilling to do so. Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to inorming the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www.iret.org

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