The Postal Service has asked Congress for $75 billion in an effort to help it mitigate the economic effects of the COVID-19 coronavirus pandemic.
The request was made in a meeting that Postmaster General Megan J. Brennan had yesterday with the House Committee on Oversight and Government Reform.
The Postal Service Board of Governors formally requested that Congress provide the agency with:
- $25 billion in emergency appropriations to offset coronavirus-related losses;
- a $25 billion grant to fund “shovel-ready” projects to modernize the Postal Service;
- access to $25 billion in unrestricted borrowing authority from Treasury.
No details were provided in the meeting announcement as to what the “shovel ready” projects are that the Postal Service wants.
Brennan also said that the Postal Service could run out of money later this year without a bailout from Congress and that the agency is anticipating a $13 billion loss this year as a result of the coronavirus. She also warned that losses could top $54 billion over the next decade.
While those are certainly dire warnings, it is also interesting to juxtapose the projected loss for 2020 with the Postal Service’s recent annual net losses. The Postal Service lost $8.8 billion in FY 2019, it lost $3.9 billion in FY 2018, and it lost $2.7 billion in FY 2017. Less than $13 billion, but not exactly chump change and also getting bigger every year, all without the coronavirus.
The Congressional Budget Office also has predicted that the Postal Service will continue defaulting on its mandatory payments to the Postal Service Retiree Health Benefits Fund for the rest of the decade, and that prediction was made prior to the coronavirus pandemic.
The Government Accountability Office issued a report earlier this year which provides some insight into why the Postal Service is struggling with making those required payments. GAO said that employee compensation related costs comprise 72% of the Postal Service’s total costs, and while the agency has been working to reduce some of those costs, the reductions it has made are likely overstated.
There is no question that the economic impact of the coronavirus is widespread and has hurt many businesses and segments of the economy, and the Postal Service is no exception. However, given the Postal Service’s lengthy and poor financial track record, is there any reason to think that a bailout from Congress will do anything other than prolong more future losses?
Various bills have been introduced in Congress to try to address the Postal Service’s core problems, but none have ever gone anywhere. Proposals ranged from letting the Postal Service ship alcoholic beverages to making pension funding reforms and requiring Medicare enrollment to eliminating the agency’s retirement pre-funding requirement.
A bailout for the Postal Service seems almost like a foregone conclusion at this point.
The House Oversight Committee has been issuing dire warnings for a few weeks now about why Congress needs to pay out billions to prop up the agency, and lawmakers have been pushing harder and harder to include emergency funding for the agency in the next coronavirus stimulus bill.
The Trump administration was issuing warnings two years ago about how the Postal Service could need a bailout absent any reforms to its business model.
The press release on the meeting with Brennan was largely an op-ed designed to stir up fear and emotion to help the lawmakers make their case for a Congressional bailout. There seems to be a growing consensus for Congress to cough up the emergency funding, but not much by way of discussion for any reforms to the latent problems causing the Postal Service’s losses.
Would a bailout for the remainder of the fiscal year really help the Postal Service, or is it just kicking the proverbial can farther down the road? Feel free to share your thoughts on the subject in the comments below.
