The United States Postal Service (USPS), like many other businesses right now, is in dire straits. Solicitation mailer volume, a major revenue source for the USPS, has dried up as businesses remain shut down. On Thursday, the Postmaster General Megan J. Brennan informed Congress that the nation’s mail service would need $89 billion or else it would run out of cash by September.

Despite the bipartisanship coronavirus stimulus negotiations, Democrats’ desire to shore up the USPS as a part of the coronavirus relief has hit a partisan roadblock. This roadblock has been led largely by Treasury Secretary Steven Mnuchin, who told lawmakers during the Coronavirus Aid, Relief, and Economic Security (CARES) Act negotiations that “You can have a loan, or you can have nothing at all” in response to the original provision that would have given the postal service a $13 billion grant to alleviate its financial woes. The USPS eventually received a $10 billion line of credit as part of the bill, which the postal agency has yet to draw on.

Coronavirus is the spark igniting various underlying problems the USPS has had for years. Much of these problems are derived from its most basic mandate: to deliver the mail to every American, regardless of where they may be located. This mandate has become harder to fulfill each year, as internet-driven innovations have made letters a relic of the past, even as the costs of fulfilling this mandate remain the same. 

Beyond just its basic mandate, the USPS is hampered by other onerous Congressional regulations that no other federal agency or private company is saddled with. That includes the 2006 Postal Accountability and Enhancement Act (PAEA), which required the USPS to prefund the healthcare retirement benefits for its employees 75 years into the future. While the bill might sound innocuous or even prudent on its face, it has been criticized as “the most insane law by Congress, ever.” That is because Congress gave the USPS 10 years to create this $56 billion fund, with the annual contributions equaling 8% of the postal service’s annual revenue. Already in a precarious position of fulfilling its basic mandate in the age of the internet, this bill has wiped out the slim profits the USPS makes most years. 

The Postal Service is caught between a rock and a hard place. On one side is Congress, which treats the USPS as it were a federal agency immune from market woes. On the other side is the market, with competitors like the internet, UPS and FedEx slowly chipping away at its bottom line. Congress can’t have it both ways with the USPS; if Congress wants the USPS to be a public good that serves all Americans, then it must financially support the USPS, especially during a time of crisis. If Congress wants the USPS to be a self-sufficient federal agency, then it must cut it loose from burdensome requirements, like PAEA.

There are signs that Congress is beginning to recognize there is a problem with the USPS. Congress agreed to include grant money in the CARES Act before Mnuchin shot down the provision. In early February, a bill to repeal the portion of PAEA that requires the USPS to prepay its retirement health benefits passed the House with 301 cosponsors from both parties. It would enable the USPS to shift to a pay-as-you-go model for its retirement health benefits, how every other federal agency and most other businesses handle these benefits. Crucially, this would provide the USPS with additional wiggle room to fund its retirement healthcare benefits, though these benefits would still remain a significant cost. The repeal’s fortunes in the Senate should be good, considering the bipartisan House effort. Once it’s on President Trump’s desk is another question. The administration has been accused of wanting to privatize the USPS, a move that is easier to accomplish if the postal service is bound to its retirement prepayment requirements during the coronavirus crisis.

Repealing PAEA prepayment provisions alone is not enough. Grants to the USPS should be a Congressional priority as part of the of widely expected fourth coronavirus relief bill, in addition to repeal of the postal service’s retirement prepayment requirements. Funding for universal postal voting would also provide the USPS with much needed cash, while serving a purpose of its own. Hundreds of thousands of jobs are on the line if the USPS collapses, as well as the postal service’s vast network of last-mile delivery that has become essential for Americans who are unable to shop in stores as they normally would. If Congress, or the Trump administration have a desire to reform or privatize the USPS, this crisis would not be the time to do such a measure.

Read the full piece here.

We’re used to thinking of testing as a public health function. But there’s growing support for workplace-based testing for COVID-19 infections as a first step towards getting the economy restarted again. Scott Gottlieb, former head of the FDA, wrote a op-ed for the Wall Street Journal where he argued that

As employees return to work, perhaps as early as May, employers can offer screening at their place of business. Rapid diagnosis and containment will be a critical part of limiting spread.

An essay by Rajaie Batniji, co-founder and chief health officer at Collective Health, a health benefits company, makes the same point. Indeed, companies such as Amazon and Whirlpool are already exploring workplace-based testing. Amazon, in particular, is starting to take steps towards regularly testing all staff, including those without symptoms, according to CEO Jeff Bezos in his letter to shareholders.

What are the pluses and minuses of workplace-based testing? Done right, it benefits workers, businesses, and the broader society. Individuals get a safer work environment and sick leave if they test positive. Businesses get to stay open in a sustainable way. And public health is improved, especially if the information gained from the test can be used to inform contact tracing. It becomes a bridge to broader testing. Workplace testing gets us a lot closer to the 500,000 tests per day that many experts think is necessary.

Done wrong, workplace-based testing can be used as a hammer against workers, violating privacy without gains. The key is to understand what workplace-based testing can do and what it can’t.

First, we’re talking about tests for current COVID-19 infection, not tests for antibodies or immunity. Some people have suggested favoring workers who have coronavirus antibodies, but it’s going to be some time before we know how long immunity lasts. As long as that’s unknown, companies have to test for infections.

Second, businesses must pay for the test. Currently, each cartridge for Abbott Laboratories’ rapid coronavirus tests costs $40. The Cepheid point-of-care test requires a cartridge that sells for $35. By comparison, average compensation in the private sector is about $35 an hour, so the cost of one test is about an hour of work. In addition, we’d have to add in the cost of the equipment and trained personnel to administer and run the tests.

But these numbers will likely come down quickly as more tests come on the market. Big companies can buy in bulk, which can help bring down the costs. And Amazon is exploring building its own testing capabilities.

Third, the nasal swabs or saliva analysis will have to be repeated regularly, both because of the possibility of false negatives and because workers can obviously pick up the coronavirus at home or in the community. In addition, they will have to be supplemented with daily temperature checks.

Fourth, the work environment will have to be restructured, where possible, to minimize the number of people affected if and when someone is found positive. That means shifts, even for office work, and rearrangement of factories and the like to reduce contact. This is essential, from the personal, business, and public health perspective.

Fifth, the information from the tests has to be available to the public health authorities for contact tracing and potential isolation of infected people. That’s essential to fully leverage business testing for the public good.

Indeed, this division of labor is appropriate for the United States. health care system, which still depends on employer-provided health insurance. Companies are used to providing health coverage for workers, so testing becomes a relatively small part of these expenditures.

While much of testing can be decentralized to workplaces, contract tracing and followup is something only the public sector can take the lead on, aided perhaps by the sort of technological capabilities that companies such as Apple and Google are building. And to be frank, there still isn’t yet bipartisan political support for expanding public health funding enough to support both large-scale testing and large-scale contact tracing.

Legally, testing by employers is on firm ground during a pandemic, as part of providing a safe workplace. The EEOC has already noted that

Generally, measuring an employee’s body temperature is a medical examination. Because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature.

The same reasoning applies to other kinds of pandemic-related testing. In addition, the EEOC has noted that while employers must keep health records in a confidential file, they may disclose the name of employees that have COVID-19 to public health authorities.

As an economic decision, workplace testing is a positive for employees. Everyone wants to earn a living, and no one wants to die. So workplaces that pay more attention to safety will be more attractive to workers, especially if a positive test comes with paid sick leave and payments for care.

Similarly, as the cost of testing goes down, it looks increasingly appealing from a business perspective as well. A large body of economic literature shows that businesses that don’t test will have to pay higher wages in order to attract workers, even in these hard times. Workers have a good sense of their risk level, and vote with their feet accordingly.

The largest businesses are likely to be the ones that lead the way towards testing. Pre-pandemic, there were roughly 1400 firms with employment over 10,000 workers in the United States. Together these firms employ roughly 30 million workers. Not every big company will test, of course, but if 10% of these big-company workers are tested every two weeks, on average, that comes to 300,000 tests per day.

To be a good proposition for workers and businesses, testing doesn’t have to be perfect but it does have to be systematic. Businesses can’t stop and start — they have to pick a strategy and stick to it. And the strategy has to include a commitment to take immediate steps when positives occur, as they inevitably will.

It should be noted that there’s one part of the labor market where the risk-pay tradeoff doesn’t hold, and that’s immigrant workers, especially from Mexico. According to a 2010 economic study, Mexican immigrant workers “on average

receive zero or very low levels of wage premiums for fatal injury risks.” The key factor appears to be whether the immigrant worker is fluent in English. So industries that employ a larger number of Mexican immigrants who are not fluent in English — notably agriculture and food production — may not be under the same pressure to test.

The public health analysis is more complicated. On the one hand, opening up workplaces does reduce social distancing and increase potential transmissions. It’s a function of how many people are in contact with each other at the workplace, the length of time between tests, and the odds of being infected at home or in transit.

On the other hand, sustained business testing will take a significant burden off the public health system. If a significant number of large employers start workplace testing, it has the potential for reaching a large number of Americans quickly.

But the benefits of this testing require that the public health system be ready to act on this information with sustained contact tracing, to understand how the worker got infected and to potentially isolate their families and contacts who may be asymptomatic and not realize that that they are infectious. Businesses obviously cannot do contact tracing beyond the workplace — that’s the responsibility of the private sector. So business testing makes sense as a complement to investment in public health contact tracing as well.

What about the downsides of workplace-based testing? It clearly raises issues of privacy, especially if the names of people who test positive are passed onto public health authorities. It’s essential that workers not be penalized for testing positive. Nor should they be penalized for being in a vulnerable category, like being over 60 or immune-compromised. Indeed, comprehensive testing makes it easier to employ such people.

Similarly, workers that test positive should be eligible for paid sick leave. That’s likely to raise payroll costs more than the testing itself. If we assume that 5% of the big-company workforce tests positive at any moment and is on sick leave, that raises average weekly compensation costs to large companies by $2.5 billion. That’s a significant cost, but it can be absorbed or passed onto consumers as an essential part of doing business.

Another issue is whether small businesses can afford workplace-based testing that allows them to compete with big businesses. Some provision should be made for allowing small businesses to take advantage of the testing supply chains that large companies develop, to bring down the costs.

In the end, testing in the workplace is an affordable proposition. It will raise costs and likely prices, and lower profits, but that’s a small price to pay for a safer workplace.

Read the full piece here.

Since locking up the Democratic nomination for president last week, former Vice President Joe Biden has moved swiftly to unify the party around his candidacy. His campaign recently secured endorsements from two former rivals, Massachusetts Sen. Elizabeth Warren and Vermont Sen. Bernie Sanders, and announced a series of joint policy task forces to bridge the gap between the Biden and Sanders agendas. The presumptive nominee is right to seek common ground with the left in building a big-tent coalition to defeat Donald Trump, but these efforts should prioritize forward-thinking public investments instead of backwards promises to expand programs like Medicare and Social Security for affluent retirees. Doing so would be both good policy and good politics.

Federal spending on retirement programs was a key point of contention throughout the Democratic primary. Sanders and Warren proposed expensive expansions of Medicare and Social Security that would increase benefits for people of all income levels, while Biden’s proposed expansions were more-narrowly targeted to benefit vulnerable populations. Although Biden’s pragmatic vision was the one embraced by an overwhelming majority of Democratic primary voters, he moved towards the Sanders/Warren position last week when he proposed lowering the age for Medicare eligibility from 65 to 60.

Read the full piece here.

Lawmakers are gearing up to funnel more money into the new Paycheck Protection Program, which makes loans to small businesses to cover payroll and expenses during the Coronavirus pandemic. The program has been flooded by applications, with one bank seeing more than 85,000 customers apply for $22.2 billion on the first day.

Small businesses are a key component of the American economy, accounting for 44 percent of gross domestic product, 47 percent of private sector employment, and 41 percent of private-sector payroll. But it turns out that it’s not so easy to get $350 billion in loans out to businesses in a hurry. The Small Business Administration (SBA) has been overwhelmed and banks are scrambling to set up systems for processing the huge volume of loan demands.

That’s why in addition to enlarging the Paycheck Protection Program, policymakers should adopt innovative ways to get relief to millions of small business owners.

One way to accelerate lending is to enlist private companies that work with small businesses everyday. Last week, the SBA approved fintech companies like PayPal, Intuit, and Square to participate in the Paycheck Protection Program. These companies have both the virtual infrastructure necessary and the ability to quickly reach small business owners to deliver the loans. Fintech trade group Financial Innovation Now, whose members include those three companies, estimates that its members “could rapidly disburse approximately $100 billion in capital to vulnerable small businesses, in many cases within weeks.”

While allowing fintech companies to participate in the program will expedite the funds to small businesses and alleviate pressure on the banks, the application process has gotten off to a rocky start with the SBA experiencing system outages. Policymakers should seek to smooth the application process by providing additional support to the SBA.

Tax and regulatory relief can also be a lifeline to small businesses. Lawmakers should include rules discouraging state and local governments from imposing costly and burdensome taxes and regulations on small businesses. In a particularly egregious example, Philadelphia requires new businesses to pre-pay the City’s Business Income and Receipts Tax beginning on their second year tax return — before many small enterprises turn profitable. And while some states have already delayed their business tax filing and payment deadlines until mid-summer, they should consider allowing payment deferral until the following year’s tax deadline and waiving associated interest and fees.

On the regulatory front, a 2017 report by the National Small Business Association found the average small business owner spends $12,000 a year on regulations, with nearly one in three spending 40 hours or more a year dealing with state and local government regulation. Tax and regulatory abatements will be a critical component of state and local strategies aimed at helping small businesses recover from the crisis. For instance, under a “One Day to Open” initiative, businesses whose licenses expired during the pandemic or are set to expire should be allowed to delay renewal for a year from their first day of reopening.

Lastly, governments should prioritize the digitization of all aspects of starting and running a business. That will alleviate pressure on administrative systems and save time and money now and in the future. Estonia’s government has digitized many aspects of government-citizen interaction including voting, tax filing, and business registration. It is estimated digitizing these processes saves the country two percent of its Gross Domestic Product a year in salaries and expenses, roughly what it pays to meet the threshold for NATO protection.

Tax and regulatory relief and digitization are essential to ensuring we get the most bang for our buck with the resources devoted to helping small businesses recover from the pandemic.

A special Providence protects fools, drunkards, small children and the United States of America” — attributed to Otto von Bismarck.

Has America’s providential luck run out? Throughout our history, at moments of supreme danger, our country has managed to find leaders of extraordinary character and ability to steer us through the storm.

Now, if you tune into the White House’s daily pandemic “briefing,” you’d think Captain Queeg was at the helm.

Great presidents are forged in the crucible of great crises. America’s struggle for independence, the Civil War, the Great Depression and World War II gave rise to George Washington and Thomas Jefferson, Abraham Lincoln and Franklin D. Roosevelt, respectively.

Donald J. Trump won’t be joining them in the presidential pantheon. He has failed abysmally to rise to what history will record as the defining test of his presidency. Some responsibility for that failure falls on Senate Republicans, who abdicated their constitutional duty during impeachment to remove a clearly unfit president from office.

Trump’s inept handling of the pandemic has helped to make America number one at something: Coronavirus infections (430,000 people at this writing.) And with nearly 15,000 deaths, we are closing in on the fatality frontrunners, Spain (15,238) and Italy (17,669).

Read the full piece here.

As broadband networks around the world start to creak under the weight of work from home and other social distancing practices, it is a bit surprising that one country has been left out of the headlines: the United States. We’ve been told for years that our broadband infrastructure is poor and that we pay too much for too little service. Look to Europe, they said. Maintain Title II regulation (“net neutrality”) or it will be the end of the internet as we know it, they said.

But it’s been more than two years since the Federal Communications Commission voted to repeal Title II and re-classified broadband as a Title I service. In the intervening period, the internet has not been destroyed. You don’t have to pay for individual Google searches, as some predicted. Broadband speeds are faster than ever. And we have yet to see headlines about increased usage forcing companies to throttle their video streaming services.

Yes, prices are lower in Europe – but so is investment, because forcing broadband providers to share their infrastructure with competitors gives them less economic incentive to improve that infrastructure. Over time, that lower investment has led to lower-quality services — a reality brought into stark relief when Europe asked YouTube, Netflix, and other streaming services to downgrade their content to prevent the internet from breaking. How did it come to this?

Read the full piece here.

The White House and the Centers for Disease Control are recommending that all Americans wear cloth face masks in public to slow the spread of Covid-19. While cloth masks are an effective stopgap measure to help preserve supply of more effective medical masks for our healthcare workers, they are just that: a stopgap.

If we could rapidly increase production of medical masks, public health officials wouldn’t be forced to make this tradeoff between effectiveness and availability. There have been growing calls, from both the left and the right, to use Title I of the Defense Production Act to effectively nationalize the supply chain of critical medical supplies. This piece of Korean War-era legislation grants the president broad authority to command the production of private industry. President Trump has started using the law, commanding GM, for instance, to begin production of ventilators and preventing mask manufacturer 3M from certain types of medical exports.

But nationalization is hugely inefficient. The government doesn’t know which specific factories have the lowest costs to adapt production processes to start producing masks or ventilators. The government can’t figure out what quantity of medical goods is optimal for each specific factory to produce, given local labor supply and existing infrastructure constraints. Government officials can’t know which simple modifications to the designs of these medical goods would enable manufacturers to ramp up production more quickly.