Opinion

Pelosi’s Postal Bailout: Return to Sender

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Posted: Mar 24, 2020 10:14 AM
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Pelosi’s Postal Bailout: Return to Sender

Source: AP Photo/David Goldman

To some lawmakers, there’s never been a better time to embrace pet projects and ideological wish lists. House Democrats recently introduced a $2.5 trillion “Take Responsibility for Workers and Families Act,” which includes many ludicrous items, ranging from carbon offsets for the struggling U.S. airline industry to $15 minimum wage stipulations for businesses getting relief from the government. But, perhaps the most hare-brained scheme is an asinine proposal to bail out the U.S. Postal Service (USPS). Americans need a simple, straightforward bill right now to get the country back on track, not misguided Postal “reform” and other insane non-priorities.

According to the Federal News Network: “In addition to setting aside $25 billion for USPS until September 2022, the 1,400-page bill would also forgive the Postal Service’s $11 billion debt to the Treasury Department and allow the agency to borrow another $15 billion. The bill would also eliminate a $3 billion annual borrowing limit for this line of credit from Treasury.” Now of course, it makes sense to give the USPS a temporary reprieve on paying back debts even though they don’t exactly have the best track record in timely repayments to the U.S. Treasury. Extending out the agency’s borrowing limit could also make sense, based on an evidence-based assessment of the USPS’s current fiscal needs. But in her frenzied push to enact a far-flung, far-left agenda, House Speaker Nancy Pelosi (D-Calif.) wants to go far beyond temporary borrowing increases and loan extensions and do a full-scale taxpayer bailout (we told you taxpayers would be paying for this).

Blanket debt forgiveness in addition to $25 billion for the USPS would merely subsidize reckless behavior and kick the can down the road for much-needed Postal reform. The problem is that current agency spending is woefully ill-targeted to get mail to the American people as fast as possible. Wasteful spending is particularly bad for the “middle-mile,” or the delivery of mail from postal facility to postal facility (before it arrives in consumers’ mailboxes). The USPS outsources these intermediate deliveries to private contractors, resulting in about $3.5 billion in annual spending on highway contract routes (HCRs). Unfortunately, these contractors often bill the USPS the full amount for their services despite missed deadlines and preventable mechanical breakdowns. Network Distribution Centers often fail to request back the funds due to incomplete reviews and paperwork lapses.

For example, in February 2018, the Inspector General found, “Chicago NDC administrative officials (AO) did not submit any reimbursement requests for the more than 22,000 YMS chargeable irregularities they reported during FYs 2016 and FY 2017.” In its 2019 report on Postal reform, the Taxpayers Protection Alliance estimated that these chargeable irregularities cost the USPS more than $1 billion per year. The USPS’s financial problems aren’t just limited to reckless contracting practices. The USPS runs a postage reselling program through which companies with high shipping volumes can take advantage of lower-than-usual postage prices via middlemen such as Stamps.com. The problem is that these reckless middlemen sell stamps at these lower-than-usual prices (plus a markup) to companies that don’t meet the volume thresholds set forth by the USPS. Resellers such as Stamps.com then pocket the markup, taking money that would’ve gone into USPS coffers. These shenanigans likely cost the USPS more than $200 million per year, yet agency leadership barely acknowledges that the reselling program even exists.

No one expects the USPS to reform its operations overnight. The agency is already straining itself to keep its workers and consumers safe from the coronavirus and it makes sense to extend temporary borrowing relief to the agency. But, forgiving debt outright and allowing continued spending and pricing problems sends the wrong message to an agency that has more than $140 billion in unfunded obligations. It’s time for Congress to get down to business and help all agencies, businesses, and households weather this storm, instead of ramming through perverse Postal “reforms” that nobody asked for and does nothing to fix the underlying structural problems at the USPS.

Ross Marchand is the director of policy for the Taxpayers Protection Alliance.