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OPINION

United States Postal Service Bailouts Are Not Working

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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AP Photo/David Zalubowski

The saying from Albert Einstein goes – insanity is doing the same thing over and over again expecting different results. While no one would confuse most members of Congress for a man who changed the modern concept of space and time, Congress continues to repeat past mistakes, expecting different results each time. For instance, enacting repeated bailouts of the United States Postal Service (USPS) while hoping the postal service will somehow start making a profit. Republicans need to wake up and put a stop wasting billions in taxpayer money to the USPS in the name of reform.

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Since the start of the COVID-19 public emergency, Congress gave the United States Postal Service (USPS) a staggering amount of taxpayer assistance, yet these repeated efforts to bailout and reform the USPS’s business model have proven an abject failure. As a matter of fact, Postmaster General Louis DeJoy received unprecedented levels of funding with no discernable reform of the postal service. Despite the billions in dollars lawmakers have thrown at the USPS, the institution remains a money losing enterprise.

It is time for Congress to take a hard look at the postal service to stop the losses and to figure out alternatives. The Republican supported Postal Service Reform Act of 2022, which became law last year and is a demonstrated failure which lacked any substantial reforms. Congress needs to stop providing no strings attached funding and recognize the fallacy that the USPS will ever be profitable. Quasi-governmental institutions don’t have the same market pressures as the private sector and Republicans should have understood this before they handed off additional taxpayer money to this cash hemorrhaging institution.

The postal “reform” law included an elimination of prefunding of employee liabilities, including health care expenses in retirement, with a sticker price of $57 billion in savings to the USPS. Add in another $50 billion in annual refunding payments with an included $3 billion that the taxpayer picked up to fund electric vehicles for the USPS and the grand total of a $120 billion bailout in consideration for the promise that these so-called reforms would result in a USPS not losing money. That promise has been broken.

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Congress has an opportunity this week to change course from bailouts cloaked in the name of ‘reform’ to implement some real changes. The House Committee on Oversight and Accountability has scheduled a hearing on May 17, 2023 titled “Tracking the Postal Service: An Update on the Delivering for America Plan.” That is a great opportunity to confront the Postmaster General on his unfulfilled promises that the postal reform bill requiring 6-day integrated delivery for market-dominant and the competitive products would help make the postal service profitable. 

In another broken promise, the postal reform law dumped postal employees off the books of the USPS onto Medicare with the pledge that if these liabilities were taken off the books, the USPS would magically become profitable. The Congressional Budget Office (CBO) projected last year that the change in law would increase Medicare expenses by $5.6 billion in the decade following implementation of the law, so the taxpayers were stuck with a bill which should have been paid out of USPS profits. In addition to the added cost the new law incurred, the promised reforms of the postal service didn’t lead to any savings on the USPS side of the accounting ledger. 

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It appears that some fuzzy math was used to get Republicans on board for the Postal Service Reform Act of 2022. Paul Steidler noted in The Hill that in March of 2021, the postal service put out a 10-year projection that claimed they would break even in the next ten years if the bill was passed, yet “on April 27, 2023, in an update on the strategic report, USPS said it now expects to lose $70 billion over that period.” A $70 billion accounting error would lead any rational member of the board of directors of a Fortune 500 company to start firing decision-makers and implement a serious strategy change.

The postal services own internal numbers show Congress got it wrong with the reform bill they passed last year. The USPS reported in their own Quarter 2 financials, that they lost $2.5 billion despite the elimination of the prefunding of health care for employees which they claimed was the biggest reason for unprofitability. A year before, they only lost $639 million in the same quarter. It appears that the reform bill did the opposite of the intent and added losses to the books.

It is time for Congress to conclude that the USPS is a financial mess and they need to stop the insanity of continued bailouts and pursue substantial reform.

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