| September 6, 2020 -- The United States Postal Service is part of our public trust – an essential resource for individuals and businesses, and a piece of the American fabric that has long made our nation great. The current crisis involving USPS and its solvency is not new in 2020, though the pandemic has exacerbated the problem, as it has with so many other facets of American life.
Since its earliest days in the late 1800s, the Grange has known the importance of a robust and solvent postal service and advocated for such. Specifically, the work of our members in the latter part of the 19th century to secure rural free delivery helped to elevate life in some of our nation’s most remote corners and level the playing field for social connection and business.
For more than two centuries the USPS was an official department within the U.S. government and as such had a budget that helped subsidize shortfalls in revenue, meaning its operations came with a little help from its friends – the U.S. taxpayers. In 1970, as part of an overall shift toward a smaller federal government, the Postal Reorganization Act was passed, a milestone in the evolution of USPS from federal department to self-determining agency. Over the next several years, $9 billion tax dollars were used as part of that move towards independence, and in 1982, the now-independent agency took its last no-strings-attached taxpayer dollars. Loans to the agency are still available through the federal government, but must be paid back in full.
From 1983 to 2006, under its own management with little federal interference, the agency ran a deficit budget only four times. Then in 2006, the Postal Accountability and Enhancement Act - that required it to fully fund the pension of employees 75 years out - was signed and pushed the financially solvent agency into the freefall we have seen since.
Not once since 2006 has the agency turned a profit or even come close to breaking even. Their best year since the unfunded liability mandate was 2017 when they lost just over $2.5 billion. Five years before, in 2012, the agency had its worst year on record when expenses were more than $15.7 billion over revenue and they missed making payments into the pension plan – a failure repeated year after year since. To date, the agency – which cannot set its own rates and as such does not determine its own destiny – has paid $278 billion into the fund, but owes more than $120 billion.
The act also mandated specific service goals for the USPS, weakened the provisions in the Postal Reorganization Act of 1970 that protected rural and remote post offices, and created a postal rate cap that has been beneficial to consumers but undermines the agency’s ability to raise the funds necessary for the mandated pension payments.
In 2016, then Postmaster General Megan Brennan told Congress the agency would run out of funds by 2024. By May 2020, COVID-19 shifted the timeline dramatically with Brennan’s deadline changing to first September 2020, then April 2021 as some momentum picked back up in the economy and as consumers rallied around the beloved agency, purchasing stamps and sending letters.
Americans rely on the Postal Service to deliver not only correspondence, but income checks, tax documents, and other sensitive materials daily. In 2019, the USPS handled more than 140 billion items, down from its peak of 213 billion in 2006.
The USPS is also the essential connection for many rural Americans who have been left behind in the great buildout of the internet age. Millions of Americans have no high-speed internet at home – about 30 million according to the FCC, or upwards of 41.2 million individuals as reported by a study conducted by BroadbandNow which has highlighted the inaccurate methods used to produce broadband maps.
The move by Speaker Nancy Pelosi to have Congress return and the emergency hearing with recently-appointed Postmaster General Louis DeJoy slated for Friday, August 20 is necessary. However, plans for legislation to restrict the USPS’s options to make its way out of the financial quicksand is equally short-sighted if it does not include an effort on the part of both the House and Senate to somehow repeal or reform this pension mandate.
The USPS Fairness Act, which would undo the pension pre-funding requirement, passed the House in 2017 and again just before the pandemic began this year, but has never been acted upon by the Senate. |
