USPS requests $75B amid pandemic to recover from ‘steep’ drop in mail volume

Postmaster General Megan Brennan warned the House Oversight and Reform Committee last year the Postal Service would run out of cash by 2024 without legislative and regulatory reform.

But with a sharp drop in mail volume during the coronavirus pandemic, Brennan told committee members in a virtual briefing Thursday that USPS will “run out of cash this fiscal year” without further financial assistance.

Brennan said that USPS now expects a $13 billion revenue loss tied “directly to COVID-19” this fiscal year. Over the next 18 months, that loss would approach $22 billion and would exceed $54 billion within the next decade, “threatening our ability to operate.”

“We are at a critical juncture in the life of the Postal Service.  At a time when America needs the Postal Service more than ever, the reason we are so needed is having a devastating effect on our business,” Brennan said. “The Postal Service relies on the sale of postal products and services to fund our operations, and these sales are plummeting as a result of the pandemic. The sudden drop in mail volumes, our most profitable revenue stream, is steep and may never fully recover. ”

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While the Postal Service received $10 billion in additional borrowing authority under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the agency’s Board of Governors is asking Congress for $75 billion in total financial relief in the next coronavirus spending bill.

The board has asked for $25 billion in emergency appropriations, an additional $25 billion line of credit from the Treasury Department and yet another $25 billion for “shovel-ready” projects to modernize the agency’s aging vehicle fleet and facilities.

The proposals go beyond what committee members — including chairwoman Carolyn Maloney (D-N.Y.) and government operations subcommittee chairman Gerry Connolly (D-Va.) — proposed in the House version of the $2 trillion spending deal.

“The Postal Service is holding on for dear life, and unless Congress and the White House provide meaningful relief in the next stimulus bill, the Postal Service could cease to exist,” Maloney said in a statement Thursday.

While USPS is considered an “essential service” during pandemic, Connolly said the Trump administration has yet to give postal employees the resources and protections commensurate with this emergency designation.

“We cannot allow the Postal Service to collapse,” Connolly said in a statement. “To do so would deepen our nation’s economic crisis and eliminate an important lifeline to the 1 million individuals who receive lifesaving prescription deliveries and eviscerate the very infrastructure we need to administer the upcoming elections.”

National security subcommittee chairman Stephen Lynch (D-Mass.) noted that postal employees have delivered essential medical supplies and protective equipment during the pandemic, while Rep. Brenda Lawrence (D-Mich.) noted that USPS provides essential infrastructure for the 2020 census and for mail-in ballots during an election year.

Trump: USPS ‘could make money or break even’ raising package prices

But at a coronavirus task force press briefing Tuesday, President Donald Trump pushed back on claims from House Democrats that he personally rejected a provision in the CARES Act that would give the Postal Service $25 billion in funding through September 2022.

“This is a new one. I’m now the demise of the Postal Service,” Trump said, adding that USPS should increase package and shipping rates for Amazon and other e-commerce companies to improve its financial outlook.

“They drop everything in the Post Office and they say, ‘You deliver it.’  And if they’d raise the prices by actually a lot, then you’d find out that the Post Office could make money or break even. But they don’t do that, and I’m trying to figure out why,” Trump said.

While the Postal Service has seen steady growth in its package and shipping business in recent years, officials from the National Association of Letter Carriers estimate that packages only make up about 30% of the agency’s total revenue.

While the Postal Service operates as a “last-mile” delivery option for its private-sector shipping competitors, the Postal Regulatory Commission reviews the negotiated service agreements between USPS and businesses to ensure that the agency receives a fair rate.

The Postal Service, by law, cannot subsidize private companies.

Meanwhile, PRC Chairman Robert Taub has repeatedly urged Congress to revisit and redefine the Postal Service’s universal service obligation, or its statutory requirement to deliver mail to every address in the country six days a week.

“These great, wonderful, modern companies, they walk into our old Post Office with all these routes that could never be built; you could never build them. They go into areas that you could never do, and they say, ‘Here.  Deliver this.’ And they lose a lot of money per package,” Trump said. “And they have to raise their prices, but this Postal Commission doesn’t do it. Now, we just got a chance to appoint a couple of people onto the Commission, as I understand it, and that’s good. But they have to raise their prices; otherwise, they’re just going to lose a lot of money.”