Postal Union Refuses to Pull Ad After Issa Calls Funding Claim 'Misleading'

An Ohio letter carrier heads out from his branch post office with his cart full of mail to be delivered in Akron on July 16, 2010. (AP)

The postal workers union is refusing to take down a new ad after Republican Rep. Darrell Issa accused its members of "misleading" viewers by claiming tax dollars do not support the Postal Service.

"The ad is accurate," Sally Davidow, spokeswoman for the American Postal Workers Union, told FoxNews.com.

The TV ad, which started running this week, has a voiceover claiming U.S. mail delivery doesn't cost taxpayers a "single cent" and is "funded solely by stamps and postage."

The problem with that statement, according to Issa, is that the Postal Service enjoys other "implicit subsidies" -- a 2007 Federal Trade Commission report noted that the service does not have to pay taxes, including property tax; does not have to pay vehicle registration fees, and can borrow at low-interest rates through the U.S. Treasury.

Issa wrote a letter to union President Cliff Guffey Monday urging him to take down the ad in light of those details.

"All told, these implicit subsidies, let alone extra powers, are worth several hundred million dollars annually," Issa wrote. "I ask you not to engage in a campaign to mislead the American people."

But Davidow noted that the same study cited by Issa explained that the Postal Service enjoys those benefits because it has "special burdens." For instance, Davidow said, the Postal Service is required to serve the entire country, even rural areas where mail delivery is not cost-effective.

Indeed, the FTC report estimated that federally imposed restraints on part of the Postal Service's operations -- as of fiscal 2006 -- cost between $330 million and $782 million annually, while the special benefits were worth between $39 million and $117 million.

Davidow suggested the benefits were justified and didn't undermine the union's claim about being unsupported by tax dollars.

"We do not intend to pull the ad," she said.

Guffey also said in a statement that the ad was meant to "dispel the persistent myth that our work is funded by taxpayers" and counter claims that the workers are seeking a "bailout."

The dispute comes in the middle of a broader legislative battle between Issa and Postal Service workers.

The California congressman, who chairs the influential Oversight and Government Reform Committee, is pushing a bill in Congress that would create a commission to recommend office closures, allow for five-day delivery and make several other changes to save what Issa claims would be at least $6 billion annually. The Postal Service recorded an $8.5 billion loss in fiscal 2010.

Issa's office refers to his proposal as "the only legislation introduced this Congress which would return the Postal Service to solvency."

But the union claims the proposal would decimate the service, without addressing underlying financial problems.

Instead, the union is advocating for a separate bill introduced by Rep. Stephen Lynch, D-Mass., which would allow the Postal Service to use pension plan overpayments to cover its health benefits obligations -- though Issa's office disputes the claim that the Postal Service has overpaid into retirement funds.

The union also claims its financial woes are caused in large part by a requirement to pre-fund retiree health care costs.