by Timothy L. O’Brien
The U.S. Postal Service is dysfunctional, timeworn, and hemorrhages billions of dollars a year. It’s also an essential operation that still knits communities together and helps major private carriers get their packages to doorsteps.
So it’s wonderful that a bipartisan coalition in the House of Representatives finally mustered the will Tuesday evening to pass a bill that gives the Postal Service a fighting chance. Politicians have warned that the post office was in danger of running out of money in two years without an overhaul.
The Postal Service Reform Act aims to do just that, by ending a budget oddity that had hamstrung the service for more than a decade. It also rationalizes how the post office handles its employees’ health benefits, mandates greater transparency and oversight around its bookkeeping, and opens the door to modernization and innovation. A companion bill is expected to get bipartisan backing in the Senate and the White House has signaled its support. Change is afoot. The Postal Service has been a political football over the last two years, buffeted by concerns that Postmaster General Louis DeJoy, appointed by the Postal Service’s board during former President Donald Trump’s term, was undermining operations to give his benefactor an advantage in the 2020 presidential election. The post office’s financial and strategic challenges have also been repeatedly misdiagnosed, by Trump and others, leaving little hope that its problems could be solved.
The Postal Service offered Congress a reminder of its dire condition Tuesday morning when it released results for its fiscal first quarter. It reported a net loss of about $1.5 billion, compared to net income of $318 million in the same quarter a year ago. Revenue fell $202 million to $21.3 billion, which the post office attributed to waning e-commerce deliveries that had surged during the COVID-19 lockdowns. Lower mail volumes and higher costs also weighed on results.
No enterprise can survive that kind of routine financial bleeding, but it’s also worth remembering that the Postal Service isn’t a business. It’s a public service, and the Constitution identifies it as such. Like the military, public schools, police, firefighters, and the national intelligence and diplomatic corps, it hasn’t used traditional private-sector accounting. (The post office’s deficits also pale in comparison to federal agencies like the Pentagon, for example, which rings up tens of trillions of dollars in annual “accounting adjustments.”)
Trump regularly cited losses on package deliveries as the culprit eating away at the Postal Service’s profits, but the package business had given the post office a nice revenue boost. Mail delivery, the service’s true lifeblood, has been unspooled by email and other technological changes and has been slumping for years.
A big chunk of the Postal Service’s losses, about $46.7 billion for the fiscal years 2014 through 2021, were also due to a congressional mandate requiring it to prefund future retiree health benefits for its employees — which many other public and private entities don’t have to follow. The prefunding requirement also accounts for $152.8 billion of the service’s $206.4 billion in liabilities. The House’s legislation does away with that requirement, and also forgives about $57 billion of the liabilities associated with it. The bill’s sponsors also said the accounting change, and a requirement that the service’s retirees enroll in Medicare, will save the post office another $50 billion over the next decade.
The House bill requires the post office to provide easily searchable delivery data that consumers can use to track mail and packages, and mandates the service to continue delivering mail at least six days a week — whether it’s an election year or not.
There are other changes the Postal Service should also consider pursuing, beyond what the House bill envisions. It could encourage the sprawling retail network of post offices to offer more diverse services and become more entrepreneurial. Raising the price of postage stamps would also help its finances, but an independent commission sets those prices, not the Postal Service.
Still, the House bill goes a long way toward refashioning the Postal Service and gives it the financial relief it needs to be creative — and, hopefully, profitable. The Senate should follow suit as quickly as possible.
