Issues & Insights

Postal Service’s Blank Check Must Be Returned To Sender

Usually, federal agencies at least admit to spending billions of taxpayer dollars per year. America’s mail carrier has taken a different route, bizarrely claiming that it “receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.” Never mind that the U.S. Postal Service (USPS) received $10 billion from Congress to offset pandemic-related losses. Or, the $3 billion given to the USPS by Congress to purchase electric trucks. Or, the more than $3 billion per year in subsidies the agency rakes in through tax gimmicks and preferential loans. 

And now, the USPS is making a grab for even more taxpayer dollars. The agency recently entered into a “note purchase agreement” with the U.S. Treasury, giving it access to up to $3 billion per year in federal loans below market rates. Instead of bailing the USPS out for its poor spending decisions, the Treasury should make the agency spend its $20 billion cash reserves in implementing direly needed reforms. This blank check must be returned to sender.

The Treasury’s half-baked plan to dole out low-cost loans to the USPS is just the latest failure in federal postal policy. Lawmakers made a similar blunder in passing the 2022 Postal Service Reform Act, naively assuming that, if they wipe away the USPS’ debts and give it a clean slate, the agency will stop burning through cash. The reality is that the agency’s financial difficulties are largely of its own making. Even before “postal reform” found its way onto President Joe Biden’s desk, the USPS’ net “controllable losses” (i.e., loss due to factors within the agency’s control) were topping $2 billion annually

One reason why the agency is doing so poorly financially is its overbuilt infrastructure. For example, the struggling agency has far more processing equipment and collection boxes than it needs. The Inspector General (IG) noted in 2016 that “removing unnecessary collection boxes throughout the Eastern Area would eliminate 73,043 work hours over the next five years,” saving millions of dollars. Postmaster General Louis DeJoy wisely increased removals of unneeded equipment when he assumed office in 2020, but an outcry fueled by postal misinformation forced him to halt these needed changes. Ramping up removals could go a long way toward creating a lean, consolidated postal network.

The agency also has far more post offices than it needs. A 2021 report by the IG notes that, “among nearly 13,000 underwater [i.e., money-losing] post offices, one-quarter are within three miles of another post office and more than half are within five miles.” Closing these offices would be a welcome departure from the current approach of crude closures that leave consumers without any remaining offices nearby.

The USPS’ financial missteps are not limited to its mail delivery network. The post office sells money orders to consumers despite private competitors providing this service at lower prices than the USPS. This proto-banking service has been faring poorly in recent years. According to an October 2022 report by the IG, “management continued to increase prices even though Postal Service money order prices exceeded those of its main competitors. Further, Postal Service money order costs exceeded revenue in three of the last five years.”

Clearly, there are many areas that the USPS can focus on if it wants to get back into the black. Asking taxpayers to fund yet another low-interest loan is merely kicking the can down the road at a time when the federal government is already $31 trillion in the hole. Bailouts and blank checks are not the solution to postal financial woes. It’s time for the USPS to fess up to existing support from taxpayers and deliver on a better approach.

Ross Marchand is a non-resident fellow for the Taxpayers Protection Alliance.

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1 comment

  • But, but, but closing all those unnecessary Post Offices are going to leave a lot of postmasters/mistresses out of a job. We can’t have that now, can we?

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