Postmaster General Louis DeJoy warned a Senate panel Friday that the Postal Service faces indefinite losses if Congress doesn’t provide help.
“Without dramatic change, there is simply no end in sight,” he told the Senate Homeland Security and Governmental Affairs Committee.
DeJoy, a Republican donor and ally to President Trump, appeared before the panel because of accusations by Democrats that he initiated changes slowing down mail processing to stop mail-in ballots from being counted in the upcoming election. On Tuesday, he put those changes on hold until after November’s election.
In the hearing, DeJoy said that the changes were not meant to block mail-in voting, but to address the dire fiscal state of the Postal Service.
He informed the committee that the Postal Service suffered a net loss of nearly $9 billion in fiscal year 2019 and is on track for an $11 billion loss this year.
“We face an impending liquidity crisis that threatens our ability to deliver on our mission to the American public,” he said, adding that “currently, our liabilities exceed our assets by approximately $135 billion.”
The Postal Service does not receive federal funding for operating expenses and relies on the sale of stamps, products, and services. So far, those initiatives are proving to not be enough to keep the agency from drowning in red ink.
DeJoy began his job at the Postal Service in June, and Friday marked his 67th day in office. When he started, the agency had $13 billion in cash and faced $12.5 billion in payments that were due over the next nine months.
One factor ballooning costs by roughly $4 billion, over an undisclosed period of time, was that roughly 12% of the 35,000 to 40,000 daily trips postal workers made to deliver the mail were late, which proved costly.
The agency’s inspector general found that the postal service spent $1.1 billion in mail processing overtime and penalty overtime, $280 million in late and extra transportation, and $2.9 billion in delivery overtime and penalty overtime costs in fiscal year 2019.
Under DeJoy, late daily deliveries dropped from 3,500 to 600.
“I believe we’ll get at least a billion of savings out of that,” he said, but he did not specify a time period for when those savings will occur.
The transportation changes also caused delivery delays.
“Unfortunately, some mail did not — our production processing within the plants was not fully aligned within the plants was not fully aligned with this established schedule,” he said, adding, “We had some delays in the mail, and our recovery process in this should have been a few days, and it’s amounted to be a few weeks.”
DeJoy called on Congress to address the agency’s retirement program by integrating its retiree health benefits program with Medicare, which he said would be a “common-sense, best practice followed by all businesses who still offer retiree healthcare.”
Washington enacted legislation in 2006 that required the Postal Service to create a $72 billion fund to pay for retiree healthcare costs. If that liability were removed, the agency would have reported profits over the last six years, according to an analysis by the Institute for Policy Studies, a liberal think tank.
He also urged Congress to provide $10 billion in relief addressing the effects of the coronavirus on the agency’s financial condition. However, the agency on Friday stated that it has “experienced only minor operational impacts” due to the pandemic.
The House on Saturday is slated to vote on legislation providing $25 billion to the Postal Service. The measure is expected to pass with Democratic support. Senate Republicans back $10 billion in funding.
