Rather than tackle the financial woes of the U.S. Postal Service head-on, Congress is readying yet another taxpayer-funded bailout.
Despite already receiving $10 billion in coronavirus relief funding from the CARES Act, the Postal Service managed to rack up a net operating loss of $4.9 billion in 2021, a loss primarily driven by the 20-year trend of declining first-class mail volume. In a rational world, this would lead to the USPS introducing cost-cutting measures to reduce labor costs, reexamining the viability of Saturday delivery, and scaling back postal facilities to meet public demand.
Unfortunately, Congress now appears poised to take on the Postal Service Reform Act, legislation pushed by postal workers unions that broadly aims to avoid cost-cutting measures. Instead, it would shed the USPS’s expenses on to taxpayers. A vote could be held in the House of Representatives as soon as next week.
Of pressing concern for taxpayers, the bill contains a massive change in healthcare coverage that offloads the USPS’s financial liability to fund postal retirees’ health insurance benefits onto taxpayers via the Medicare system. Under current law, postal retirees’ health insurance benefits are covered under the Federal Employees Health Benefits program. The USPS is currently required to make pre-funding payments to the program designed to achieve full pre-funding for their own retirees. In short, the USPS is required to fund postal retirees’ health insurance benefits on its own.
The Postal Service Reform Act would instead create a separate Postal Service Health Benefits program for USPS employees, retirees, and their dependents. While participation in the program would be voluntary for current postal retirees, nearly all current USPS employees and future retirees will no longer be eligible to participate in the USPS-funded FEHB program. They will instead be required to enroll in the Medicare system at the expense of taxpayers.
According to estimates from the Congressional Budget Office, this shift of future postal retirees on to Medicare would increase Medicare spending by $5.6 billion through 2031. However, the CBO estimate only covers a 10-year window and fails to capture the true cost of the bill. According to the USPS’s own financial documents, the full annual retiree expense for 2021 alone was $4 billion and projected to grow to $5.2 billion by 2026. Over time, as current postal employees retire and current retirees and dependents pass away, Medicare would absorb the USPS’s full retiree expense. Thus, the true cost once all postal retirees are on Medicare would likely be $40 billion-$50 billion.
Voters will raise their eyebrows when learning that the Postal Service Reform Act has gained nearly 40 Republican co-sponsors in the House. The Medicare expansion in this bill contradicts positions long held by GOP lawmakers to rein in Medicare spending and protect taxpayers. Throughout President Joe Biden’s first year in office, Republicans have held the line opposing Democrats’ reckless trillion-dollar tax-and-spending spree, rightly attacking Democrats’ overspending for contributing to the highest levels of inflation in 40 years.
Why, then, would Republicans abandon fiscal responsibility now to bail out a unionized Democratic constituency?
Postal unions overwhelmingly support congressional Democrats, contributing over $900,000 to Democratic candidates in the current election cycle, accounting for 84% of postal unions’ total political contributions.
Republican lawmakers should stand firm and continue opposing Democratic spending increases. Let Democrats go home to their districts and explain to voters why taxpayers are on the hook for the USPS failing to fund its retirees’ health insurance plans.
Mike Palicz is the federal affairs manager at Americans for Tax Reform.
