A Universal Support Fund for Postal Services in the United States

The long-term financial sustainability of the postal operator in the United States (USPS) has been thoroughly discussed in the past few decades, but the implemented reforms have not yet achieved this objective. In this chapter, we attempt to address the possibility of financing the USO in the United States through a Universal Support Fund (USF) because of its potential advantages. It would fund service targets that an ordinary business would not be required to meet. It is consistent with economic theory that places a value on the option to have mail and parcels delivered to every door. It is also consistent with funding that supports other essential services. Leaving aside the political difficulties associated with introducing a USF, there are two major technical challenges: sizing the fund correctly and funding it in a way that allows USPS to plan effectively. This paper will address both challenges by examining the advantages and disadvantages of a Compensation Fund (CF) supported by other providers (mainly from parcels and courier express) versus a public fund financed through an income tax (Brennan in The postal and delivery contribution in hard times. Springer, New York, 2022). This comparison will consider the practical feasibility, the potential market distortions, and the economic equity issues linked to spending financed by taxes.