“Reform” spells trouble for the US Postal Service
The United States Postal Service is not known for its financial acumen.
The agency has lost more than $90 billion over the past 15 years, including nearly $15 billion since the pandemic began.
Delivery speeds have recovered since mid-2020, and the agency has a historic amount of cash on hand. But USPS leadership has failed to stem the fiscal bleeding.
And now lawmakers will make things worse by passing the deeply misguided HR 3076, the Postal Services Reform Act of 2021.
This bundle of changes would shift pension costs and hook the USPS for ill-defined “non-postal services.” Congress should stay away from HR 3076 and work toward real postal reform.
The Postal Service Reform Act would greatly change how the USPS works. The most widely discussed change is the “integration” of health care benefits for retirees into Medicare. The legislation would split the existing health care program for federal employees, which covers about 8 million federal and postal workers, retirees and family members, into two parts. This divorce would result in a new general FEHB and a separate postal service health benefits program financially linked to the Medicare program. Virtually all USPS employees would eventually be covered by Medicare, relieving America’s mail carrier of significant healthcare costs.
However, this “reform” does little to actually save tax money. It merely shifts a costly burden from one federal agency to another. Medicare’s spending now exceeds $800 billion a year, and the program’s main trust fund is expected to default by 2026. Adding pension obligations to an already bloated program seems an odd way to keep costs under control.
The big Medicare “fix” is getting far more attention than an even more alarming provision of the postal application.
Section 103 of the Act authorizes the USPS to “establish a program for entering into agreements with an agency of a state, local, or tribal government to provide property and services on behalf of such agency for non-commercial products and services…” The limited-sounding scope the provision appears to rule out the possibility of the USPS taking up banking (which many agency observers reasonably feared).
In reality, legislative language gives the USPS broad license to engage in banking and other troubled endeavors. To see how this works, consider that states like New Jersey and California have been toying with the idea of opening public sector banks. In 2019, Gov. Gavin Newsom signed legislation allowing California counties and cities to create their own financial institutions that can accept deposits and facilitate certain soft loans. And New Jersey has been busy examining implementation of its own public banking initiatives.
A problem for officials is the cost. When taxpayer-funded banks offer cheap financial services, that money has to come from somewhere. Enter the USPS, which can secure taxpayer subsidies and soft government bonds if it fails to balance its books. If HR 3076 becomes law in the country, expect states and localities to seek to work with the federal agency to offer allegedly “non-commercial” financial services. And if the USPS’ check cashing pilot is any indication, expect that effort to end in disaster.
If lawmakers really want the USPS to be back in the black, they must urge the agency to focus on its core strength… mail delivery. This means pricing packages appropriately to ensure artificially cheap packages don’t overwhelm mail volumes and slow down mail delivery. There is some promising wording in HR 3076 directing the Postal Regulator to review the pricing of products. But that will do little if all other problematic provisions become law.
The USPS can continue to deliver for the American people, but only if lawmakers avoid the misguided guidelines contained in the Postal Service’s “reform” legislation.
Ross Marchand is a Senior Fellow of the Taxpayers Protection Alliance. This comment was provided to News-Press by The Center Square, a non-profit organization dedicated to journalism.
The author is with the Taxpayers Protection Alliance.