The $1.9 trillion bill that passed the U.S. Senate on a party-line vote over the weekend and is poised to pass the U.S. House of Representatives calls itself a COVID-19 relief package. In reality, much of the legislation is actually focused on taxpayer bailouts of favored left-wing interest groups. Big Labor and its bankrupt multiemployer pensions, teachers unions, blue-state mayors and statehouses, along with the usual hit parade of pork projects.
The Democrats have two more bites at the budget reconciliation apple. That makes these bailouts possible without having to rely on a single Republican vote. There’s every reason to believe that the U.S. Postal Service is next on the bailout list.
If any of this sounds familiar, that’s because the USPS already received a $10 billion bailout last year in the CARES Act. It’s not surprising that they are back for more. According to the agency’s own testimony, the Postal Service has run 14 consecutive years of operating deficits. Most recently, $9.2 billion in 2020. The cumulative debt racked up over these 14 years totals a whopping $87 billion. The reason that the USPS is in such bad shape is a combination of changing times and unchanging bureaucracies. First-class mail, once the heart of what the post office was, has declined from a peak of nearly 104 billion pieces in 2000 to nearly 53 billion in 2020. That’s a cut of one-half in just a generation. Thanks, email!
Meanwhile, the fastest-growing source of USPS income comes from packages, where the government agency competes with FedEx and UPS. Money from postal package delivery now accounts for 44% of all USPS revenue, a figure that has grown sharply even as first-class mail delivery has waned. On that point, any bailout of the Postal Service should be preceded by investigations as to whether the USPS is charging customers and shippers enough for delivery.
Congress must share in the blame here.
The federal legislature micromanages what the USPS can charge for stamps and other services, mandates universal mail access for the whole country (even when the “last mile” cost is steeply prohibitive), and refuses to look at reducing the current six-day weekly delivery cycle for mail. That means 232,000 mail routes serviced by 228,000 mail trucks staffed by 470,000 postal employees at 31,000 post office branches. Altering any of these expenditure accounts would help.
The USPS has also struck really bad bargains with its various employee unions. As of fiscal 2018, the post office had $43.5 billion in unfunded pension liabilities, $66.5 billion in retiree health obligations, $16.4 billion in workers compensation, and owed a $13.2 billion debt to taxpayers. There is little doubt that this $140 billion in debt and liabilities has gotten worse since the last time the numbers were put together.
Has Congress taken off the pricing and delivery handcuffs it has imposed on the post office? Has the USPS renegotiated its pension and healthcare promises to its employees in order to control long-term costs? Are there postal facilities, routes, and trucks that don’t need to be there anymore? Should the workforce be as big as it is given the precipitous decline in first-class mail volume?
All these questions and more should be answered before a massive taxpayer bailout occurs. Dealing with these problems directly, in fact, would avoid the need for a bailout at all.
Ryan Ellis is the president of the Center for a Free Economy
