Updated: House coronavirus spending bill gives USPS $25B, wipes slate on its Treasury debt

This story was updated at 8:54 a.m. on Tuesday, March 24 with statements from USPS and lawmakers, and at 10:21 p.m. on Monday, March 23 with details on USPS funding in the Take Responsibility for Workers and Families Act

House Democrats unveiled a coronavirus stimulus spending package on Monday night that would give the Postal Service $25 billion over the next two years to withstand an expected loss in mail revenue.

The $2.5 trillion Take Responsibility for Workers and Families Act is the third and largest emergency funding bill lawmakers have introduced to mitigate the pandemic’s strain on the economy and the health system.

In addition to setting aside $25 billion for USPS until September 2022, the 1,400-page bill would also forgive the Postal Service’s $11 billion debt to the Treasury Department and allow the agency to borrow another $15 billion. The bill would also eliminate a $3 billion annual borrowing limit for this line of credit from Treasury.

“The Postal Service is in need of urgent help as a direct result of the coronavirus crisis. Based on a number of briefings and warnings this week about a critical fall-off in mail across the country, it has become clear that the Postal Service will not survive the summer without immediate help from Congress and the White House,” House Oversight and Reform Committee Chair Carolyn Maloney (D-N.Y.) and Government Operations Subcommittee Chair Gerry Connolly (D-Va.) said in a statement.

Both lawmakers also reiterated these concerns in a letter to Senate Majority Leader Mitch McConnell (R-Ky.)

The spending deal comes a few days after Connolly and four of the largest postal unions and submitted similar stimulus funding proposals for the Postal Service.

The bill would also require USPS, deemed an essential service amid the pandemic, to prioritize the delivery of medical products, including prescription drugs.

“It would authorize the Postal Service to establish temporary delivery points during the crisis and allow it to institute flexible delivery in the event its operations or employees are impacted by the coronavirus outbreak,” House Appropriations Committee staffers wrote in a summary of the spending bill. 

A Postal Service spokesman told Federal News Network that, as of the beginning of this week, about 40 postal workers had contracted the coronavirus.

In response to the pandemic, the agency has reached several agreements with postal unions on steps to protect workers from catching the virus.

USPS reached an agreement with the National Association of Letter Carriers that would grant non-career city carrier assistants up to 80 hours of paid sick leave through May 17.

The sick leave would apply to CCAs who have tested positive COVID-19, exhibited symptoms or have come into direct contact with someone with the virus. It also covers employees who have traveled to China, South Korea, Iran and much of western Europe in the past two weeks, or have returned from a cruise ship.

More broadly, USPS also struck an agreement with the unions that would allow postal employees to use their sick leave for unexpected childcare needs during the next 60 days.

“Managers and supervisors should also allow liberal sick leave for employees who are sick, and liberal annual and leave without pay (LWOP) usage to the extant operationally feasible during this time period,” Doug Tulino, USPS’ vice president of labor relations, wrote in a memo to unions on Monday.

Leave taken for coronavirus purposes between Feb. 29 and May 17, Tulino added, “may not be cited in discipline for failing to maintain an assigned schedule.”

Rep. Connolly, unions back USPS coronavirus stimulus to maintain ‘essential service’

The Postal Service warned Congress last year that it would run out of cash by 2024 without legislative and regulatory reform – even sooner, if USPS paid all of its financial obligations.

But an economic recession triggered by the coronavirus pandemic could accelerate that timeline and jeopardize the operations deemed an “essential service” during the spread of COVID-19, the illness caused by the current strain of the virus.

The same night President Donald Trump signed a $100 billion coronavirus aid package into law, four of the largest postal unions requested a similar relief package for the Postal Service, which has already been facing a looming financial crisis.

The Postal Service, in a statement Tuesday, said it has experienced “only minor operational impacts in the United States” because of the pandemic.

However, unions fear an economic recession could pose a “serious threat to the near-term viability of the Postal Service,” and have asked Congress to give USPS more than $7 billion each year for the next two years.

USPS receives no annual appropriations from Congress, and lawmakers have resisted calls for an agency “bailout” in recent years.

Following the 2008 recession, mail volume fell by 20% over two years. In response to that crisis, the Postal Regulatory Commission approved an emergency two-cent increase on postage stamps that the PRC repealed in April 2016.

If the coronavirus pandemic triggered a recession of that magnitude, the unions expect USPS would lose about $4 billion in revenue annually.

That, the unions wrote, would “threaten the Postal Service’s solvency,” since the agency as of last December, had $8.4 billion in cash on hand.

The two-year emergency funding for USPS is just part of a five-point stimulus plan from the American Postal Workers Union, the National Association of Letter Carriers, the National Rural Letter Carriers’ Association and the National Postal Mailhandlers Union that would help USPS “survive the coming recession.”

Rep. Gerry Connolly (D-Va.), chair of the House Oversight and Reform Committee’s government operations subcommittee, on Friday supported a similar relief package of $10 billion that USPS could split between this year and next.

“Congress must not ignore the US Postal Service. Mail volume plummeted this week and USPS will run out of cash by June,” Connolly wrote in a tweet Friday. “Every household and every business in America relies on our postal service. We can and should take swift action to return it to solvency or risk its collapse.”

Jamie Smith, Connolly’s chief of staff, told Federal News Network in an email that the lawmaker supports a coronavirus stimulus package that would forgive the Postal Service’s current $11 billion debt to the Treasury Department and give the agency another $15 billion in borrowing authority.

These and other provisions would help recoup a $6.2 billion loss in revenue that Postal Service officials have cited as a “conservative estimate,” according to Connolly’s office.

“With no changes to existing law, the Postal Service now estimates it will run out of cash and have to cease operations in May of next year,” according to a document provided by Connolly’s office.

Paul Steidler, a senior fellow with the Lexington Institute, said the coronavirus pandemic is “all but certain to have a severe, negative financial impact on [USPS], significantly accelerating when it will face a liquidity crisis and be unable to provide basic services.”

“Even if that liquidity crisis is after the COVID-19 pandemic subsides, this must be avoided as it would grind the American economy to a halt and disrupt daily life,” Steidler wrote in a blog post.

Given the current situation, Steidler said it is “likely unavoidable” that the Treasury Department would increase its $15 billion line of credit to USPS.

However, Treasury “should not issue a blank check,” Steidler added, since that would “let Congress off the hook” from passing postal reform legislation that would put USPS on firmer financial footing.

“Given the structural issues that USPS faces, the effects of COVID-19 and years of failing to address this issue, Congress should enact comprehensive postal reform as soon as possible and no later than July 2021,” he wrote.

The House in February passed the USPS Fairness Act, which would repeal a 2006 congressional mandate to pre-fund retiree health benefits.

The bill, if signed into law, would move the Postal Service to a pay-as-you-go model similar to how other federal agencies and businesses fund their retirement benefits after using the money saved in its Retiree Health Benefits Fund.

The bill would also forgive all the pre-funding payments that USPS has defaulted on over the past few years. The Government Accountability Office found that the agency has missed more than $48 billion in payments to the fund.

The pre-funding mandate, combined with declining mail volume, has played a major role in the Postal Service ending the past 13 years with net losses.

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