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.
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