Marches, demonstrations and even riots have been sweeping cities across the country. Protesters have literally taken over a sector of downtown Seattle. Calls to “defund the police” are being heard even in the halls of the Congress. Some health experts are predicting a resurgence of COVID-19. Amidst all this chaos the U.S. Postal Service is begging Congress to give it another bailout. Congress should respond to this request with a resounding “NO.”
The United States Postal Service (USPS) has suffered from well-documented structural problems for years; long before the coronavirus pandemic hit early this year. However, in recognition of the difficulties the Postal Service faced along with almost every other business sector hit hard by the COVID-19 pandemic, it received $10 billion as part of the CARES Act. For any well-run business, that should have sufficed to get it over the pandemic hump. Not for the folks at the USPS.
Now, just a few months after that huge cash infusion, the Postal Service is coming back begging for another bailout; this time for a whopping $25 billion. In the absence of meaningful structural reforms to the failed business model under which the USPS long has operated, Congress should not even consider granting this request.
For one thing, in light of recent jobs numbers and other signs that the economy already is bouncing back, there may be no need to pass the most recent proposed COVID-19 “stimulus” package, the HEROES Act. Even aside from this broader perspective, however, it is clear that giving the USPS as it currently is structured more taxpayer money, would be throwing good money after bad. The Service needs reform – major structural reform – not a bailout.
The Postal Service operates according to a broken business model. It has lost billions for more than a decade and will continue to lose billions endlessly as it currently is configured. Its operational losses are continuing to increase, yet its leadership is not proposing any reforms. They are asking for debt forgiveness while facing a huge and increasingly negative balance sheet. The Service hides the revenues it loses on package deliveries by calling them “institutional costs;” it increases fees for First Class mail and for mass mailings. None of these steps have stemmed the fiscal hemorrhaging.
It is hardly a winning argument to say that giving money to the U. S. Postal Service is only fair because without such largesse it is forced to operate as a government-run service at a disadvantage in competition with private sector delivery businesses. Private sector delivery services are profitable and strong (especially in today’s economy) because of how they are structured, how they operate, and perhaps most important, how they respond to changes in the marketplace. Compared to companies like UPS and FedEx, the USPS is the Pony Express.
Numerous reforms have been recommended but are routinely ignored. The Department of Treasury conducted a comprehensive study of the USPS and recommended substantial changes. President Trump has called the USPS a “joke” and has demanded reforms. A 2018 White House Task Force issued recommendations, but the Postal Service failed to act on any of them. Congressional Democrats labeled the reforms “privatization” — the kiss of death for Democrat Party members of Congress and voters.
On April 30, 2019 the House Committee on Oversight and Reform held a hearing titled, “The Financial Condition of the Postal Service,” at which Rep. Mark Meadows (R-NC), now President Trump’s Chief of Staff, made a number of strong statements in support of reform measures. His suggestions for meaningful reform were, of course, summarily rebuffed by Democrats on the Committee. What did emerge from the hearing is that the Postal Service faces a $125 billion gap but has no plan to restructure itself now or in the future.
Adding insult to injury, at the same time that the USPS is demanding debt forgiveness, it seeks to have its retirees dumped into Medicare, so the taxpayers at large pick up the huge tab for health care benefits the Service promised its retirees.
The reforms must be real, and they must deal not only with the structure of the USPS, but also with the manner by which federal monies are used to disrupt market forces throughout the package delivery sector. Reform of the Postal Service is essential, and the time to do so is now, but not disguised as pandemic stimulus.
Bob Barr represented Georgia’s 7th District in the U.S. House of Representatives from 1995 to 2003 and served as the U.S. Attorney for the Northern District of Georgia from 1986 to 1990. He now serves as President of the Law Enforcement Education Foundation based in Atlanta, Georgia.