Last week, the House of Representatives passed H.R. 6800, the “HEROES Act,” a giant 1,800-page Christmas tree of left-wing priorities at best tangentially related to the COVID-19 pandemic. The list of pork and giveaways is astounding — as Senate Majority Leader Mitch McConnell points out, the legislation funds not one, but two, studies related to marijuana. But that’s nothing compared to what the bill does for the government’s favorite monopoly, the U.S. Postal Service.
The HEROES Act appropriates $25 billion to the Postal Service, enough to give about $200 to every taxpaying family in the country. While ostensibly to be used for the procurement of personal protective equipment for mail processors and delivery personnel, as well as the sanitation of postal facilities and vehicles, the bill only asks the USPS to “prioritize” such purchases — the agency is not restricted beyond that. There is an inspector general report requested on the matter, which of course will be promptly ignored as soon as it is issued.
The HEROES Act also creates $10 billion in lending authority for the Post Office. The American Postal Workers Union goes so far as to call the loan “no strings attached.” Basically, Treasury Secretary Steven Mnuchin would be directed to loan money to the USPS without any demands for badly needed reforms.
All this is not to be confused with the $10 billion in funds the USPS already received in the CARES Act.
Finally, Postal Service employees are deemed to be “essential workers” (all 633,000 of them, based on my read of H.R. 6800). As such, they get a raise of $13 per hour. The raise is retroactive to Jan. 27, 2020, and continues until 60 days after the COVID-19 public health emergency ends (which is not an event defined in the bill). This retroactive and open-ended pay raise is capped at $10,000 per employee ($5,000 in the case of a postal employee who earns more than $200,000 per year). Most postal workers would get the $10,000 as a lump sum, reflecting retroactive pay since January. If every postal worker eventually gets this money, this is a one-year pay bump of $6.3 billion.
This pay hike is a lot better than most private sector workers have done. According to the Federal Reserve, 40% of workers earning less than $40,000 per year reported a job loss since March 2020. But if it isn’t a help to most of us, it’s a big windfall to the Postal Service labor unions — the aforementioned APWU, the National Association of Letter Carriers, the National Rural Letter Carriers Association, and the National Postal Mail Handlers Union. They will no doubt get to extract union dues from this back pay. Assuming a modest dues rate of 2%, the retroactive bonus amounts to a Big Labor windfall of $127 million. Most to all of that money will be plowed into 2020 general election efforts, and much of that will be used to try to defeat President Trump.
That’s probably why Trump is on record as opposing any USPS bailout without enacting meaningful reforms. The president has a long interest in the subject. In April 2018, he signed an executive order to evaluate the operations and finances of the Postal Service, a “business” which loses money every year.
The Government Accountability Office says that the USPS has lost $78 billion in recent years due to declining mail volume and soaring labor and retiree costs. The Daily Signal breaks this out further, pointing out that the USPS has lost money for 13 straight years — and is expected to lose money again this year despite all the government bailouts. No private sector company could do that and survive.
The Treasury Department released a report on postal reform in response to Trump’s executive order. Treasury recommended that exorbitant agency labor burdens (76% of annual operating costs at the USPS are salary and benefits) be trimmed. The report further recommended that the huge unfunded liability on postal pensions and retiree healthcare ($126 billion at the time of the report) be cut by reducing benefits and moving to a defined contribution retirement system.
New White House chief of staff Mark Meadows should review the Treasury and GAO reports closely when evaluating the administration’s response to the HEROES Act postal bailout. There is no reason to throw good money after bad, to reward a deeply dysfunctional government agency hostile to internal reform, nor certainly to give a gift to politically hostile labor unions. If the Democrats want to give extra money to the USPS, the agency should face up to its massive structural defects and enact real reforms in exchange.
Ryan Ellis (@RyanLEllis) is the president of the Center for a Free Economy.
