The congressional race is on to throw taxpayer money at the U.S. Postal Service (USPS) and bidding could soon surpass $100 billion without any sensible and overdue reforms. The American people and USPS would be best served by a “time-out” on additional taxpayer funds to USPS, including through President Biden’s $3 trillion infrastructure plan.
On March 23, Postmaster General Louis DeJoy announced an in-depth, comprehensive strategic plan that aims to eliminate $160 billion in USPS losses over the next decade and to end operating losses by fiscal year 2023. The plan merits careful evaluation.
The House Oversight and Reform Committee is considering draft legislation to relieve USPS of tens of billions of dollars in retiree health benefit costs. Another House measure would provide USPS with $6 billion to purchase electric vehicles.
Some discussion suggests actuarial changes could be made to USPS’s pension liabilities, improving on paper the organization’s financial position up to $100 billion.
Last August the U.S. House of Representatives was called into a special Saturday session to consider $25 billion in “emergency” funding for USPS to ensure on-time mail-in ballot delivery. The measure passed the House, stalled in the Senate, and USPS delivered mail-in ballots in an exemplary and smooth manner.
The $25 billion was scaled down from a $75 billion USPS request in April 2020, following pandemic-related worries that USPS could run out of cash by September 2020. The dire forecasts were wrong. In fact, USPS financials during the pandemic have outperformed pre-pandemic budget projections.
Nonetheless, a fifth COVID relief package in December provided $10 billion to USPS.
Both Postmaster General DeJoy and his predecessor, Megan Brennan, have warned USPS’s business model is broken. Rep. James Comer (R-Ky.), ranking member on the House Oversight and Reform Committee summed up USPS’s difficulties: “Demand for First Class Mail has plunged, and the costs have stayed the same. No business could be expected to survive in such a scenario without making tough decisions. A second core issue is emerging: demand for packages has exploded and the Postal Service isn’t equipped to deal with it.”
A piecemeal bailout approach to USPS ignores the underlying realities needing solutions. As such, Congress and the administration should declare a time-out on additional financial assistance and enact comprehensive reform by 2022. Congress should take this approach for the following reasons.
- Congress’s Independent Auditor Advises Major Reforms. USPS has major financial and structural problems that must be addressed. Congress’s independent auditor, the U.S. Government Accountability Office, on March 2, 2020, again included USPS on its biannual high-risk list of government agencies. In GAO’s words, “comprehensive legislative reform” is necessary.
- USPS is flush with cash. As a result of the December funding and better than expected finances during the pandemic, USPS has $26 billion in cash and available cash.
- Financials continue to benefit from the pandemic. For the first four months of Fiscal Year 2021, USPS made $8 million compared with its budgeted loss of $1.9 billion.
- Dire predictions of financial harm at USPS have been consistently wrong. The erroneous projections follow estimates that USPS could lose $22 billion annually due to the pandemic. Losses are less than half that.
- Vehicle purchases are being made over 10 years. USPS’s $5.8 billion vehicle purchase programs take place over 10 years. It has sufficient funds to buy needed vehicles over the next 18 months, including just electric vehicles if it chooses.
- Costs need to be examined. Reports from USPS’s Office of Inspector General have urged it to take a more granular approach to understanding its costs on a per product basis. This is essential to re-price products. Furthermore, this is common sense and prudent financial management.
- Political patronage will degrade and corrupt USPS. The Postal Reorganization Act of 1970 set USPS on its current path. It was to be self-supporting through the sale of postage and services and far less susceptible to political interference. The more Congress directly funds USPS, the more USPS is susceptible to political interference.
The fundamentals of USPS are strong. It is well-respected by the American people and it still delivers large volumes of mail as well as packages. Rather than throwing money at USPS and manipulating its operations, Congress should establish the framework by which USPS can return to self-support and freedom from political interference.
Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Va.