The US Postal Service Needs Big Reforms, Not a Big Check

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If you followed only the headlines and mainstream press coverage, you might think that the U.S. Postal Service was on the verge of bankruptcy and needs an immediate taxpayer bailout of $75 billion or more to keep functioning.

However, a financial report
that the USPS released on Friday revealed a crucial piece of information that
single-handedly obliterates months of fearmongering: The Postal Service has enough
resources to continue operations for at least an entire year, even after
accounting for the effects of the COVID-19 pandemic.

That means that Congress has more than enough time to put together legislation to reform (or transform) the Postal Service, which has serious long-term problems that a bailout would utterly fail to address.

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The issue of USPS solvency came to the forefront in March, when the Postal Service began telling members of Congress that it faced a reduction in revenue and increased costs in the wake of COVID-19.

As a result, Congress included a $10 billion loan to the
Postal Service in the CARES
Act
relief package.

However, congressional Democrats and a former postmaster general claimed that that was insufficient, calling for a massive bailout package of taxpayer-funded cash grants and loans to ensure continued mail service.

Much of the media coverage focused on tenuous claims
from House Democrats that the USPS could go bankrupt as early as this summer,
even with the CARES Act loan.

That false narrative, which has
persisted
, thrived in part because of a nearly complete lack of public data
on the financial state of the Postal Service.

The lack of information even extends to Congress. Sen. Ron Johnson, R-Wis., who as chairman of the Homeland Security and Governmental Affairs Committee oversees the Postal Service, issued a letter last week requesting weekly financial updates from the Postal Service.

In recent weeks, postal analysts began to counter the
doomsday narrative.

The Lexington Institute, an Arlington, Virginia-based
nonprofit that advocates for limited government, pointed
out
that a sharp increase in package deliveries was
compensating for lower mail volume. That means that the Postal Service is not experiencing
the type of steep revenue drop that businesses such as restaurants and hotels
are facing.

The latest USPS quarterly financial report made this reality
crystal clear. The report, which covers the period from January through March, shows
a 2%  increase in revenue over the year
before.

If USPS revenue had actually collapsed as a result of
COVID-19, we would have seen at least a modest decrease for the quarter.

The report goes on to say that the service has “sufficient
liquidity to continue operating through at least May 2021.”

Thus, the USPS itself has debunked the union-backed
push for including a big postal bailout in the next COVID-19 relief bill.

However, there is one thing that everyone can agree on: The Postal
Service is in trouble.

The nonpartisan Government Accountability Office highlighted
this fact yet again in a new report
just last week.

It details the long-term decline in first-class mail,
increasing liabilities fueled by the costs of retiree pensions and health
benefits, and expensive service mandates imposed by Congress that ignore the
reality of life in the 21st century.

As a result, the USPS has lost money each of the past 13 years, totaling $78 billion since 2007.

While the problems are serious, there are plenty of
solutions available to legislators who want to modernize mail service while
protecting taxpayers.

On May 8, The Heritage Foundation released a robust policy
report
on the Postal Service. The report lays
out plain facts about long-term structural issues that threaten the viability of
the USPS and provides a variety of approaches to fixing them. Those include:

  • Restructuring the USPS and mail service to free both from congressional micromanagement.
  • Reducing the frequency of mail delivery to fit the reduced volume of mail.
  • Auditing the pricing of package and mail services to ensure that the Postal Service is prioritizing sustainable levels of revenue.
  • Reforming employee compensation to better fit best practices from the private sector.

Many of those reforms were included
in the fiscal 2021 budget proposal from President Donald Trump.

Even if Congress balks at the best and boldest ideas, there
are still plenty of commonsense ideas available to legislators. If Congress can
pass meaningful reforms in the next few months, that would give the USPS (and
its new postmaster
general
) sufficient time to implement the
reforms and stanch the financial bleeding.

Cutting a big check to the USPS with taxpayer money would
merely pass the problem (and the bill)
onto future generations. Further, the USPS’ own financial report shows that
there’s no justification for an immediate bailout.

Congress has known about the unsustainable finances of the
Postal Service for years.
Now, the problem has come to a head.

When it comes to postal reform, there’s no more time to
waste.

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