The Postal Service seeks to cut costs and its regulator gave the agency greater flexibility setting higher mail rates, but Congress could have a far greater impact putting the Postal Service on firmer financial footing — if it chooses to act.
Members of the House and Senate have introduced variations of the same postal reform bill in recent years, but nearly all failed gain much momentum.
Lawmakers this week, however, brought forward the first major postal reform bill of the new Congress. Reintroduction of this bill, which passed the House last year — along with other recent postal actions on Capitol Hill — suggests a heightened level of interest in addressing the Postal Service’s longstanding issues.
The USPS Fairness Act, introduced by Sens. Brian Schatz (D-Hawaii) and Steve Daines (R-Mont.), would eliminate the Postal Service’s 2006 obligation to pre-fund retiree health benefits well into the future. The bill passed the House in 2019, but stalled in the Senate.
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House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-N.Y.) and House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.) introduced companion legislation, along with Reps. Brian Fitzpatrick (R-Pa.), Tom Reed (R-N.Y.) and Colin Allred (D-Texas).
The bill would let USPS off the hook for billions of dollars in defaulted prefunding payments. If enacted, USPS could continue to pay for retiree health benefit premiums from its Retiree Health Benefits Fund until it’s depleted.
“There is no reason we should be requiring the USPS to pre-fund its future health and retirement benefits. It’s an unnecessary burden that is jeopardizing its financial health,” Schatz said in a statement. “This is an easy fix that will dramatically improve USPS’s finances and ensure mail delivery can continue uninterrupted.”
Daines said the bill would “help the Postal Service stay in business providing world-class delivery of our mail every day while also ensuring its employees maintain their benefits.”
The bill, first introduced by DeFazio in 2019, doesn’t go as far as requiring future postal retirees to enroll in Medicare Part B, as previous postal reform bills had proposed. That provision drew scrutiny from the National Active and Retired Federal Employees Association (NARFE).
The USPS Fairness Act, however, has received endorsements from all the major postal unions and NARFE.
“Rescinding the prefunding requirement is a crucial move toward reforms that will shore up Postal Service finances, uphold postal retiree benefits and preserve this essential institution, upon which hundreds of millions of Americans rely,” NARFE National President Ken Thomas said in a statement.
While Congress has delayed action on long-term postal reform, lawmakers last year approved short-term relief for USPS as part of its COVID-19 relief spending packages.
Lawmakers gave USPS a $10 billion loan in the CARES Act, which Congress then turned into a one-time appropriation under its latest COVID-19 pandemic spending package.
Because of this, USPS has more cash on hand than it’s ever had in recent years. It ended 2020 with more than $14 billion in cash, but USPS executives warn it’s still a matter of when — not if — the agency will run out of cash.
Mike Plunkett, the president and CEO of the Association for Postal Commerce, said USPS should have enough cash to keep operating through at least 2023, but warned it would be unwise for Congress to continue to delay action on postal reform until the last minute.
“There will be an opportunity to just postpone action, which I think would be a mistake, because there really is a need for reform. Unfortunately, if people assume that a crisis — meaning the Postal Service just isn’t going to be able to deliver the mail — is necessary to precipitate reform, I don’t see that happening,” Plunkett said.
While USPS leadership seeks to eliminate its pre-funding mandate, the agency hasn’t contributed to the Retiree Health Benefits Fund since 2010, and has defaulted on nearly $52 billion in payments to the fund. Even though USPS hasn’t made these payments, it’s required to keep these liabilities on its balance sheet.
How USPS would manage benefits without the pre-funding mandate, however, remains unclear. Paul Steidler, a senior fellow at the Lexington Institute, said in a recent blog post that eliminating USPS’s prefunding requirement would reduce its annual net losses, but wouldn’t address its “underlying fundamental financial challenges, which include a broken business model.”
“As such, it might even breed a temporary sense of complacency and make things worse by postponing holistic postal reform,” Steidler wrote.
Without USPS contributions to the Retiree Health Benefits Fund, Steidler warned there’s a “high likelihood” postal employees and retirees would see benefits cuts, or that taxpayers would assume a larger share of these costs.
House and Senate lawmakers also want the Postal Service to play an active role in the fight against COVID-19.
In a letter to President Joe Biden, Sens. Bernie Sanders (I-Vt) and Schatz joined Reps. Adam Schiff and Ro Khanna (D-Calif.) to propose tapping USPS to distribute the “highest quality medical-grade masks available” to the public.
While the Biden administration has required mask-wearing in federal buildings and issued a “100-Day Masking Challenge” to the public, the lawmakers said that “many don’t realize that a high-quality mask can make it far less likely that the wearer will contract the disease, even if exposed to an infectious person.”
“Nearly a year into the pandemic, we must do more to both educate Americans and to increase supply and availability of more effective masks,” the lawmakers wrote.
With the USPS still reporting delays in mail delivery, Rep. Bill Pascrell (D-N.J.) has urged Biden to fire the entire USPS Board of Governors, which consists entirely of former President Donald Trump’s appointees.
“The continued challenges in preserving our Postal Service to survive and endure are gargantuan, and so demand bold solutions to meet them. To begin that work, we must have a governing body that can be trusted to represent the public interest,” Pascrell wrote.
Rep. Tim Ryan (D-Ohio) has also supported Pascrell’s plan to fire the board, citing constituents’ calls about late bills, checks and holiday cards.
“The response from the leadership of the USPS to the unconscionable delays we are experiencing with the mail is beyond unacceptable,” Ryan said in a statement.
Sens. Tim Kaine (D-Va.) and Mark Warner (D-Va.) have asked Postmaster General Louis DeJoy what steps USPS is taking to improve on-time delivery now that its holiday surge is over. Meanwhile, Sens. Chris Van Hollen (D-Md.) and Ben Cardin (D-Md.) led much of the Maryland delegation in writing to DeJoy with similar concerns.
The Biden administration hasn’t received the idea enthusiastically. White House Press Secretary Jen Psaki, when asked about Pascrell’s letter in a recent press briefing, said it was an “interesting question,” and that “we all love the mailman and mailwoman,” but didn’t have any further comment.
However, Plunkett said it would be unwise for Biden to clean house. The board currently has four Republican governors, two Democratic governors and three vacancies.
Rather than remove Senate-confirmed board members, Plunkett said Biden should instead focus on getting his own nominees through the Senate approval process.
“Should board members be held accountable? Of course, but making panicked decisions, like the wholesale replacement of postal leadership without thinking through the implications would be terribly irresponsible,” Plunkett said.