Congress Is Just As Responsible for ‘Clusterfuck’ at USPS
To hear many of his critics tell it, President Donald Trump is killing the U.S. Postal Service. Few of those critics, however, are naming his most important accomplice: Congress.
It’s true that Trump has been increasingly hostile to the Postal Service. His most recent moves to slash service in the name of efficiency and fiscal health come during a pandemic era when the agency and the country can seemingly least afford it—and as an election looms.
Members of Congress, from both parties, have decried the moves as threats to the heart of the American infrastructure—striking the economy, public health, and democracy—and have scrambled for photo ops in front of USPS facilities around the country while pushing for billion-dollar relief packages to give the beleaguered agency a lifeline.
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But before the Trump administration’s COVID-era designs on the USPS took shape and made the mail a hot-button issue for the first time in decades, Capitol Hill was content to let the Postal Service twist in the wind for 15 years as it sank into the red and piled up tens of billions of dollars in long-term debt.
A sweeping postal reform bill that was unanimously approved in 2006 was hailed as a major achievement in that moment, when concerns over the fiscal viability of the USPS were high. But built into the legislation was a requirement, unique to any federal agency, to pre-fund a half-century of pension obligations for USPS employees within 10 years—a provision that some lawmakers and experts now call misguided at best or absurd at worst.
It seemed like sound fiscal housekeeping until the Great Recession hit, decimating Postal Service revenues that were already being eroded by the growth of email and the decline of first-class mail. The agency couldn’t keep up, and began defaulting on its benefit pre-funding payments in 2012. It now faces some $160 billion in overall unmet debt obligations, darkening its fiscal future.
The authors of that 2006 bill, Sens. Susan Collins (R-ME) and Tom Carper (D-DE), have stuck by the law but have floated proposals in recent years to shore it up. But year after year, the only thing surer than a sea of red ink at the Postal Service was Congress’ inability to do anything about it.
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Trump’s pick for Postmaster General—Louis DeJoy, a GOP mega-donor who once ran a USPS competitor—spent the summer enacting strict new policies that have already led to delivery delays and service cuts by citing fiscal woes. “Let me be clear about the reasons behind our restructuring and the need for our plan,” said DeJoy in a recent memo. “Our financial condition is dire.”
The Trump administration’s decision to target the Postal Service has shocked the country—which, in turn, seems to have stirred Congress from its postal stupor. The outcry forced DeJoy to reverse himself: in a Tuesday announcement, he said he was suspending “reform” initiatives until after the November elections. It was not immediately clear what the announcement meant for some steps, such as a 10 percent reduction in mail sorting capacity, that have already been taken. And the announcement seemed to suggest a key DeJoy measure—curtailing overtime hours for postal workers—was still in effect.
After years of being on the faintest of all backburners, the USPS—which public polling routinely finds to be among the country’s most popular institutions—will be at the center of high-profile Capitol Hill hearings in coming weeks. Lawmakers from both parties are rushing to get behind tens of billions of dollars in emergency relief money to rescue it.
A broad spectrum of experts say, however, that lawmakers need to own their role in contributing to the Postal Service’s distressed state as much as they blame Trump. “This is a bipartisan clusterfuck,” said Matthew Titolo, a law professor at West Virginia University who studies the Postal Service. “There’s a lot of blame to go around… It’s clearly blowing up in people’s faces.”
“Congress is definitely complicit,” said Kevin Kosar, a USPS expert at the R Street Institute, a right-leaning think tank. The mix of challenges the Postal Service faces, he said, “can’t possibly play out well, and Congress has done nothing.”
Ironically, the 2006 bill that experts point to as a key pressure point on the USPS was born out of a style of bipartisan dealmaking that’s rarely seen these days—and that many believe will be needed if the USPS is ever to be truly reformed.
One of the bill’s key provisions was meant to save serious money in the long term by shifting from a pay-as-you-go employee pension structure to a more self-sustaining model. To that end, the bill required the agency to put aside roughly $5 billion for pensions annually—a benchmark that might have been attained had the 2008 financial crisis and recession not struck. “What it looked like at the time was a pretty routine kind of inter-governmental budgeting policy,” said Titolo. “The way it worked out, though, people had to have foreseen it would cause problems.”
Indeed, by 2012, the Postal Service began defaulting on the pension prefunding payments after contributing a total of $18 billion. Today, a large share of its $160 billion in debt—$119 billion—consists of a combination of unmet retirement benefit and health care benefit obligations, according to a 2019 report from the Government Accountability Office.
Those who pay attention to the USPS know that the agency has broader problems than the pension mandate, like the technological changes that have led to sustained declines in demand for first-class mail. The coronavirus pandemic, which has hit the postal business hard, figures to make the hole even deeper. But for many observers, it’s hard to separate the agency’s current fiscal outlook from Congress’ however well-intentioned efforts to reform it.
“I think it was a good policy,” said Kosar. “I think it was badly drawn up… there’s $50 billion in unfunded retiree benefits they’re going to have to pay. This is an organization that is not turning a profit, and can’t be expected to turn a profit. How are they going to pay those benefits?”
The law’s key authors, Collins and Carper, have defended their product amid criticisms that have amplified up in recent years: Lawmakers like Rep. Bill Pascrell (D-NJ) called it the worst bill Congress has passed in “generations.”
In a statement to The Daily Beast, Carper said the 2006 bill was a “much-needed” reform but, “unfortunately, the Great Recession, that started just a year later, hindered efforts to fully implement the bill and make further improvements.”
“The 2006 Postal reform bill helped rescue the USPS from the severe financial challenges it was facing at that time, protecting nine million jobs nationwide,” said Annie Clark, a spokesperson for Collins.
The senators have proposed several reforms to the initial legislation. In 2012, the Senate passed a bill Collins sponsored that would have expanded the initial 10-year time period for pre-funding to 40 years, easing a time crunch that critics had said was arbitrary. And in 2016, Collins sponsored another bill to give the Postal Service more flexibility in fulfilling the pre-funding mandate.
But none of those measures became law, however. The fiscal outlook for the agency continued to darken while its health remained a peripheral concern for most of Congress and the country.
It’s safe to say that COVID-19—and the reign so far of Postmaster DeJoy—have changed that. Like others before him, DeJoy has cited the Postal Service’s deep debts as a central justification to pursue restructuring efforts. But the sheer brazenness of those efforts has made front-page news around the country and prompted shock among Democratic and GOP lawmakers alike over their potential to affect mail delivery at a crucial time.
In July, The Washington Post reported that DeJoy’s plan to pursue fiscal responsibility included a strict directive to leave mail behind at USPS distribution centers if waiting for it caused mail carriers to be late in their delivery routes by even a few minutes. The effects were on display last week in Portland, Maine, where a mail truck left behind 80,000 pieces of mail for a route rather than be 10 minutes behind.
Democrats have vocally criticized those moves as tantamount to hamstringing the USPS ahead of an election cycle during which record numbers of voters are expected to cast their ballots by mail due to the pandemic. DeJoy has publicly expressed confidence that the agency will be able to handle a massive spike in paper ballots, but in late July, the USPS sent a letter to 46 states warning that their deadlines to request paper ballots would risk disenfranchising voters due to the realities of how the mail “works.”
DeJoy announced on Tuesday that the USPS wants to avoid any appearance that its changes will impact the 2020 election. But he is still expected to face tough questions from House and Senate committees in coming days about his moves so far.
Lawmakers are also putting together a new raft of measures meant to provide a short-term lifeline to the USPS and try to set it on the right course going forward. A coalition of senators, led by Collins and Sen. Dianne Feinstein (D-CA), have pushed for a $25 billion emergency funding bill, a sum the USPS board of governors asked for, to help it staunch the bleeding. A condition for the funds is that it report to Congress about how USPS intends to get its fiscal house in order in the future.
Experts, like James O’Rourke, a professor at Notre Dame, say the bill would help in the short-term but wouldn’t do much to steer the Postal Service away from an imminent fiscal cliff. “Sometime between June and August of 2021, the Postal Service is going to be out of cash—it can’t meet payroll, it can’t buy motor fuel,” said O’Rourke. “That is a train you can see from a long way off, and there’s nothing anyone’s done to change that.”
Some on the Hill have floated a simple fix for the long-term health of the agency: repealing the pre-funding mandate. In February, the House of Representatives passed a bill to do just that. Its sponsor, Rep. Peter DeFazio (D-OR) told The Daily Beast that he gets puzzled looks from constituents when he tries to explain the Postal Service’s pension burden.
“It’s like, what? How does that work?” he said, arguing the USPS is “not an agency that needs massive reconfiguration or changes under the ruse of making it more effective.”
Some experts, like Kosar, argue a more lasting fix will involve concessions that factions in Congress have been reluctant to make to this point—like benefit cuts, for Democrats, and some kind of Treasury bailout for the USPS, for the GOP. “The choices we find ourselves with right now,” he said, “are unpleasant.”
Others see Trump’s designs on the USPS as something that might finally galvanize some kind of action—if only because the political pressure is now there. “No, with the spotlight rightly on the Postal Service, I’m hopeful some of my colleagues might finally join me,” said Carper, with respect to his efforts to reform the USPS.
“For the Democrats, if they wanted it to be, this could be a major boost for them in 2020,” said West Virginia’s Titolo. “The Post Office is incredibly popular with the American people… if they can’t fix it now and make it a major issue going into November, it’s hard to know what could be a worse political decision than that.”
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