Five Reasons Federal Stimulus Money To The Postal Service Is Harmful

Congress is moving in the direction of enacting the country’s fifth COVID relief package. And with millions of Americans facing extraordinary life and death challenges, there is clearly a need for targeted emergency relief, especially to our tens of millions of vulnerable citizens who are hungry and out of work through no fault of their own.

Since April, the U.S. Postal Service (USPS) has been at the forefront of discussions and debates about additional COVID relief. Yet, USPS received $10 billion of additional borrowing authority in the March 27 CARES Act, which it has not tapped, and is not likely to tap for a year or so.

In April hysteria was unleashed by Congressional Democrats and special interest groups that USPS would be out of cash by as early as September without an emergency $25 billion cash grant. The U.S. House of Representatives passed legislation providing these funds at an extraordinary Saturday, August 15 session, with supporters adding the claim that the funds were imperative to ensure smooth mail-in voting.

The $25 billion bailout was not enacted, and the dire predictions were wrong.

In fact, USPS reported having $14.3 billion in cash as of September 30, which is near its highest cash amount ever. For October, due to the influx of massive amounts of political mail, USPS reported net income of $405 million compared with a projected loss of $478 million. And again, there is that $10 billion in available credit.

To be sure, USPS has severe and chronic financial problems that require fixing. For starters, USPS needs to identify its costs on a granular level and to reformulate pricing for all products and services. This is urgent given the antiquated costing systems now in place and the fact that close to half of USPS’s revenues are now coming from packages, a trend accelerated by the pandemic.

Getting to this basic operating practice requires identifying and defining USPS’s Universal Service Obligation (USO) or core mission. Some USO services, such as mail for the blind, will merit public assistance or subsidies. Most USPS services though should be paid for entirely by those who use the service.

Senior citizens on a fixed income in Nebraska should not have to subsidize packages for millennials in San Francisco who would rather order online than go to a store. Furthermore, a $25 billion bailout amounts to $75 from every man, woman, and child in America, further compounding our staggering and dangerous national debt.

Blindly throwing cash at USPS will not eliminate the structural problems that are leading to chronic losses of $10 billion annually. Postmaster General Louis DeJoy has repeatedly made this clear to Congress in testimony, while being wary of large cash grants.

In fact, being so flush with cash, USPS could be prone to spend it unwisely. This could include darting into postal banking, a favorite idea of many progressives.

In sum, providing additional assistance to USPS is harmful because it:

• Takes funds from where they can be better spent;
• Is quite expensive;
• Is unnecessary given USPS’s flush cash position;
• Fosters complacency on pursuing broader reform of USPS; and
• Could be the catalyst for USPS entering troubling and costly activities outside its core operations.

For these reasons and others, Congress and the Administration should refrain from further taxpayer assistance to USPS.

About the Author: Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.