Neither snow, nor rain, nor heat, nor gloom of night keeps the U.S. Postal Service from delivering the mail, but if Congress doesn’t act soon, financial insolvency just might.
President Trump’s focus on the postal system and the rates it charges packagers attracted national media attention – and kicked off a presidential task force charged with coming up with recommendations for putting the Postal Service on firmer financial footing.
{mosads}But then the national spotlight dimmed.
The presidential task force report (originally due in August) has been delayed, reportedly until after the mid-term elections. Yet the fiscal plight of the U.S. Postal Service continues to fester.
This financial insolvency poses particularly serious risk for rural America, which remains heavily dependent on the Postal Service for communications and commerce and, in some remote areas, survival. It’s important to recognize that 44 million of 157 million USPS delivery addresses are located throughout sparsely settled rural areas. No private sector shipper would choose to serve our entire country and take on its great challenges to earning a profit, but the Postal Service does.
What many Americans and even some policymakers do not grasp yet is that declining mail volume isn’t the primary cause of the Postal Service’s economic stress; it is being crippled by its financial obligations.
In fiscal year 2017, the USPS reported nearly $70 billion in revenue – the majority of which still came from domestic mail products, while more than $19 billion came from packages and shipping. It’s true that First Class Mail declined 3.6 percent year-over-year, but the tremendous growth of e-commerce shipping has more than made up for it. Not bad for an entity that performs an essential public service without taxpayer dollars.
Yet for more than a decade, the 2006 Postal Accountability and Enhancement Act has required the Postal Service to prefund retiree health benefits for 75 years – a huge expenditure that the USPS could not pay and still deliver the mail. USPS had defaulted on more than $38 billion in prefunded health benefits by the end of the 2017 fiscal year – that’s over half of its revenue for the year, with $10s of additional billions yet to fund.
As the President’s Task Force continues its work, the Postal Service’s financial obligations continue to grow, and its condition continues to deteriorate, putting millions of jobs throughout the country at risk.
If we want to preserve mail and package delivery as we know it for hundreds of millions of Americans and avoid a taxpayer bailout, the Postal Service’s balance sheet needs to be reformed – and soon. Instead of waiting for the President’s Task Force to release recommendations, most of which will likely take years and multiple congressional sessions to implement, lawmakers should act on reform legislation for “breathing room” until longer-term changes can be put in place.
Enactment of the Postal Reform Act, bipartisan legislation currently pending in the Senate (S. 2629), as well as in the House (H.R. 6076), would provide much-needed relief for USPS. The legislation would lift tens of billions of dollars from its balance sheet by primarily reforming the Postal Service’s retiree benefits, making them more like the private sector and the rest of the federal government – at no cost to taxpayers.
Without policy changes, the independent Postal Regulatory Commission is poised to take another action that could dramatically depress postal volume: Enabling the price of the stamp to rise to 64 cents over five years, with 30-to-40 percent increases for businesses.
A customer-friendly USPS is critical to restoring its financial health and to maintaining its services to the American public. If postal rates were drastically increased, the Postal Service would essentially be biting the hands that feed it.
The business community generates more than 90 percent of USPS revenues. Mailers and shippers, including major e-commerce companies, would simply find cheaper online and shipping alternatives, causing USPS to further sink financially and compromising its ability to do its job for all Americans.
Our country has an obligation – and the necessity, especially for rural America – to keep USPS financially stable, and Congress can and must do it by reforming the Postal Service’s balance sheet before the year is out.
Art Sackler is the manager of the Coalition for a 21st Century Postal Service, an organization of public and private companies, trade associations and other industry groups which rely on the U.S. Postal Service to do business, generate $1.4 trillion in sales, and support 7.5 million private-sector jobs.