The bipartisan plan to save the Post Office
Earlier this month, amid all the sound and fury of the impeachment trial, something remarkable quietly happened: The House of Representatives passed a thoroughly bipartisan bill to save the United States Postal Service.
The USPS has been slowly bleeding for the last decade. It has lost money for 13 years straight, it's been forced to brutally cut its workforce and infrastructure, and it's become more reliant on low-pay and part-time workers. At this rate, it will run out of funds in five years. This situation has turned the USPS into a topic of partisan rancor, with liberals blaming the right's anti-government ethos, while conservatives blame liberals' anti-market obtuseness.
But then last Wednesday's passage of the USPS Fairness Act bucked the trend: It won a massive 309-to-106 majority in the House, including all 232 Democratic representatives, plus 87 Republicans. It does have sister legislation waiting in the Senate, which still needs to be passed. And then Trump (or whoever succeeds him) has to sign it — unless the bill passes the Senate with a similar two-thirds-or-more majority, in which case it's veto proof.
What the USPS Fairness Act does is scrap a requirement first imposed by the Postal Accountability and Enhancement Act (PAEA) of 2006 — that the USPS set aside enough money to cover its likely pension costs for the next 75 years. To fully understand the significance of that, we need to back up slightly.
For most of its existence, the U.S. Post Office was run and funded directly by the national government as a universal public service committed to delivering Americans' mail in rain, heat, snow, or gloom. Then, in 1970, Congress reorganized the agency into the modern U.S. Postal Service — a quasi-business entity, expected to cover its costs of operation with its own money, brought in by stamp sales and so forth, without extra subsidies from the federal budget.
That worked fine for a while. But then stiffer competition arrived in the form of private sector rivals like FedEx and UPS — competition it could've easily shrugged off back when it was still a straightforward government-funded operation. The rise of the internet and email also cut into the Postal Service's revenue stream.
That brings us to 2006's PAEA, which was basically an effort to tweak the USPS in multiple ways to shore up its finances. One of those tweaks was the pension funding requirement.
This is wildly unusual: All other government agencies with pension obligations, plus two-thirds of private sector businesses with them, fund their pensions on a pay-as-you-go basis. What the 2006 law required the USPS to do was set aside enough money between 2007 and 2016 to cover all the retiree benefit obligations that would likely arise over the next 75 years. It's sort of like being required to pay the full cost of your house with cash up front rather than making mortgage payments for the next few decades. Needless to say, it's an enormous financial burden, which is why other government agencies and most private companies don’t do it that way.
This has been a sore spot for liberals in the fights over what to do with USPS. There's a widespread suspicion that the 2006 change amounted to deliberate sabotage by conservatives, who were ideologically offended by the idea of the USPS as a public service, and who wanted to dismantle it and turn over its functions entirely to the private market. But according to a 2014 deep dive by Eric Katz in Government Executive, the pension-funding requirement may have just been a policy afterthought: "The decision made sense at the time, aides and stakeholders say, as the Postal Service was still on relatively strong financial footing and could absorb the costs in stride."
Two years later, the Great Recession caught everyone off guard and absolutely decimated the Postal Service's expected future revenues. The USPS had to start borrowing from the U.S. Treasury Department. But that borrowing was capped at $15 billion, and in 2012 the Postal Services simply stopped making the pension fund contributions required by the PAEA. But according to an assessment from the USPS Inspector General, the damage was already done: Out of its total losses of $62.4 billion during the 2007-to-2016 period, $54.8 billion was related to pre-funding the pension.
From Katz's reporting, it sounds like Congress recognized its error pretty quickly, but kept trying to pass a fix as part of larger compendium bills that kept failing. The USPS Fairness Act happened when lawmakers got fed up and proposed scrapping the 2006 pension-funding requirement as a standalone measure.
Of course, while the PAEA is the overwhelming bulk of the problem, other reforms are still needed. The age of email and competitors like FedEx has been a drag on the Postal Service's finances. In December 2018, Trump's Treasury Department released a report with recommendations for fixing the Postal Service, which included further cuts to USPS employees' pay and benefits, plus a move away from USPS's traditional commitment to universal mail service, and towards charging more for various packages and routes. But there are far less draconian options as well. Reformers have suggested using the Postal Service to provide a public option for basic banking services, a move that would both bring in new revenue and give low-income Americans an alternative to predatory lenders and such. Lawmakers could also just return the Postal Service to its original pre-1970 incarnation as a straightforward, government-funded universal public service, rendering the internet's hit to mail revenue a moot question.
For the moment, it's still an open question whether the Senate will pass the USPS Fairness Act as well. Under Senate Majority Leader Mitch McConnell, that chamber has become the place where every bit of legislation that doesn't have the rightwing seal of approval goes to die. Then there's whether Trump would sign it. The president has complained about the Postal Service getting bilked by Amazon in the past, which might suggest pro-USPS sentiments. On the other hand, it may just be Trump's rivalry with Amazon CEO Jeff Bezos at work there. That aforementioned Treasury Department report acknowledged the problems created by the 2006 law, while shying away from saying the pension-funding requirement should go — it instead called the PAEA "part of a mandate for postal self-sustainability."
But the massive bipartisan majority behind the USPS Fairness Act suggests maybe Republicans in the Senate are more open to the change than meets the eye. Maybe Trump, ever the wild card, would sign it. And even if that doesn't happen, who knows what will be possible after November's elections.
At the very least, the question of saving the U.S. Postal Service from its unjust financial fate is very much back on the table, with a thundering initial endorsement from both sides of the aisle.