Last week, the US Postal Service (USPS) announced that it had brought in $77 billion in revenue in the past year. That record-setting number popped a few eyes. It is $4 billion more than the agency reaped last year, and it exceeds the agency’s high-water mark (2008) by $3 billion, buoyed by soaring parcel volumes.
The agency was flirting with near death not long ago. The 2008 Great Recession set off a nearly 40 percent drop in the volume of paper mail, the USPS’ main revenue source.
For certain, the agency continues to face fiscal challenges. Cost control is a perennial challenge for the agency. It has a heavily unionized workforce and labors under a mandate to deliver six days per week to all 50 states along with American Samoa, the US Virgin Islands, and Puerto Rico. The agency also has significant long-term financial obligations to its current and future retirees. Last year, the Post Office had a deficit of between $2.9 and $6.9 billion depending on how one calculates it.
By law, the USPS is a self-funding government corporation. Hence, figuring out how to make that model work in the digital age is an important policy challenge. This is an unusual time for the agency. Its main line of business, paper mail delivery, continues to atrophy. Parcel delivery, which was once a small side gig for the agency, is booming. The agency is running deficits, yet it is sitting on more than $20 billion in cash.
Unfortunately,
Congress, for its part, is having trouble figuring out how to handle this new
strange world. One strains to hear well-thought-out ideas about what the role
of the USPS should be in the 21st century.
For the most part, Democrats have been driving the train on postal reform. The GOP as whole has shown little interest in the subject. The last serious push by a Republican legislator to reimagine the Postal Service occurred in 2013 when Rep. Darrell Issa (R-CA) introduced his Postal Reform Act. Democrats hated it, and the bill never got out of the House.
As
for the Democrats, their amorphous vision for the USPS is troubling. Progressives
like Sen. Bernie Sanders (I-VT) and Kirsten Gillibrand (D-NY) want the USPS to
get into nonpostal lines of business, like banking.
Democrats also seem inclined to plunge more deeply into the competitive package delivery sector. The House bill would mandate that the agency maintain a network that delivers paper mail and parcels six days per week — regardless of consumer demand. With paper mail volume continuing to erode, this portends a Postal Service that evolves into a government-subsidized parcel deliverer that endures by eating the lunch of private delivery companies. (Interestingly, Postmaster General Louis DeJoy, a whipping boy of Democrats, apparently shares this view. DeJoy has said he wants to increase the USPS’s parcel market share.)
Most audaciously, Democrats appear inclined to force taxpayers to support the agency. A year ago, Democrats claimed the pandemic would bankrupt the Post Office and gave it a $10 billion loan, and then forgave that loan. Free money from taxpayers for no particular purpose was unprecedented and unnecessary. The USPS revenues grew during COVID-19, giving the lie to the largesse.
Seeing no blowback, House Democrats pushed forward. In the spring they reported from committee a bill that would shift some of the USPS’s retiree healthcare costs to Medicare (which is funded by all Americans) and would eliminate the 2006 mandate that the agency prefund the health benefits promised to postal workers. Atop that, the Democrats also propose using the budget resolution to give $6 billion to the USPS to electrify its fleet.
All of which would end the USPS’s half century existence as a self-funding government agency. Congress took the USPS off taxpayer-provided appropriations half a century ago because legislators had made a hash of the agency. Money brings control — and control invites parochial and partisan legislators’ interests to deeply insert themselves into postal operations.
Taxpayer
supported, competing more with the private sector, and less independent — is
this the Postal Service that America wants? If so, then Democrats should say so
loudly and enact a law saying so explicitly.
The fate of postal reform rests in the hands of the Senate Homeland Security and Governmental Affairs Committee for the moment. It released its own legislation last spring, which largely tracks with the House’s draft.
While bipartisanship is admirable, joining hands to move a bill that would end the USPS’s day as an independent agency of the executive branch would be a bad move. Responsible legislators must step up. Postal reform needs to be bipartisan, well thought out, and based upon a shared vision for the agency. The American public deserves nothing less.
The post The Postal Service has been independent and self-funding for 50 years. Will congressional Democrats put an end to that? appeared first on American Enterprise Institute – AEI.