Yes: We need Postal Service now more than ever
By Horace Cooper
One of the few trucks to drive the lonely dirt road to my family's place in the rural heart of Texas lately has been the U.S. Postal Service truck. Like many jurisdictions during the coronavirus pandemic, in my neck of the woods there are limited retail sales in brick-and-mortar stores - primarily for life's bare "necessities" - making home package delivery now more critical than ever.
But even before the current public health crisis and Main Street store closures, rural communities relied on the Postal Service to deliver more than just the mail. The mailman delivers a grandmother's heart medicine and the neighbor's insulin, not to mention birthday gifts, care packages and even the special-order parts needed to fix the family minivan.
Those sorts of essential deliveries and that long reliance date back to the earliest days of the republic. Contrary to what is often claimed, the Postal Service was not spawned by Woodrow Wilson's bureaucratic brand of big government progressivism. It was not born out of the Great Depression as part FDR's New Deal. Nor is it a bell-bottomed hand-me-down of Lyndon Johnson's Great Society.
No, the Postal Service practically predates America itself. Benjamin Franklin - a distinguished Founding Father - is one of the most prominent advocates of a national postal service. He served as a colonial postmaster for the British in Philadelphia and the Continental Congress made him the nation's first Postmaster General in 1775, years before our Constitution was adopted.
In fact, our founders so valued reliable mail service that they enshrined the postal power in Article One of the Constitution just to be sure that our new nation would be guaranteed the authority to operate it. It isn't an "implied" authority divined from the elastic "Necessary and Proper Clause" that justified the Second National Bank in 1819 and the federal regulation of wheat farms in the 1930s. Instead, it is among the very few specific enumerated powers given to Congress in Article One, Section 8. Right there next to Congress's authority to borrow and coin money, raise an army and support a navy, the Constitution grants Congress the power "to establish Post Offices and post Roads."
Our constitutionally authorized post offices are now at risk as the Postal Service teeters on the brink of financial ruin. Like other service providers, the Postal Service faces declining revenues and rising costs during the pandemic. Without an enhanced federal appropriation and additional borrowing authority, the service will be out of money and potentially out of business by Christmas if mail volumes - down 33% so far this year - continue to plummet.
As part of the coronavirus "stimulus" package, Congress increased the Postal Service's borrowing authority by $10 billion. But like so many things in Washington that authority came with strings attached - namely, "terms and conditions" to be imposed by the Treasury Department. Those conditions remain under negotiation, but Treasury's own 2018 Task Force previously recommended anti-competitive measures requiring Postal Service price hikes and curtailed package delivery.
Coincidentally, competitors like UPS and FedEx have lobbied for many of these regulatory changes. The Postal Service has resisted because it rightly believes that raising prices above market levels will make its package delivery service less competitive and further steer customers to their competitors. And these competitors can charge as much as 10 times to 25 times the price of the USPS to deliver the same parcels.
Reform is needed. But throwing the baby out with the bath water will harm more than help.
And without prompt congressional action, consumers may soon be surprised to discover that UPS, FedEx and Amazon do not serve nonmetropolitan areas nearly as cost-effectively as their advertising might have you believe. We may be surprised that grandma's heart medicine will cost $24 to ship instead of the $4 it costs today. You see the Postal Service has efficiencies over its competitors for package delivery because it can add parcels to the daily mail rather than paying for each and every trip down each and every road - especially in the heartland.
As the old motto goes, "Neither snow nor rain nor heat nor gloom of night " keeps the postman away - but a financial death-spiral at the U.S. Postal Service just might.
Horace Cooper is a senior fellow with the Market Institute. He wrote this for InsideSources.com.
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No: The Postal Service and coronavirus opportunism
By Paul Steidler
The Postal Service, leading House Democrats and postal unions are using the coronavirus pandemic to raise fears of an imminent postal collapse, demand $89 billion in unrestricted federal grants and loans, and to beat up the Trump administration.
The situation underscores what is wrong in Washington with the issuance of blank checks instead of solving problems through practical means and compromise.
Unlike many small businesses, health care providers and local governments, the Postal Service's finances have long been a mess. Beginning in 2009, the Government Accountability Office had the Postal Service on its High-Risk List of government agencies.
At the end of fiscal year 2019, the Postal Service recorded its 13th consecutive annual loss, reported a negative net worth of $71 billion and its unfunded liabilities exceeded $140 billion.
On April 9, the Postal Service made its audacious ask for $89 billion in grants and loans. This is 125% of its 2019 revenues. The request came less than two weeks after President Donald Trump signed the CARES Act, which included $10 billion in additional borrowing authority for the Postal Service.
The Postal Service is taking a hit from the coronavirus crisis. Its mail volume is down about 30%, but its package business is up sharply, though the Postal Service has not revealed those numbers.
The Postal Service has put forward nothing to justify the $89 billion. The only public information was in an April 9 news release from the U.S. House of Representatives Oversight and Reform Committee, listing $75 billion of the request. An additional $14 billion to address "existing debt forgiveness" was leaked from the committee.
Even the broad requests should be summarily rejected by Congress. The Postal Service says it will need $54.3 billion to address coronavirus losses over the next decade. Yet, it is requesting $34.7 billion more than this, or $89 billion. And it wants all the money now. The Postal Service also says it needs $25 billion for "shovel ready" infrastructure that has little to do with coronavirus.
Rather than asking for a more realistic and financially responsible proposal, House Democrats immediately exploited the issue. In an April 10 news release, Rep. Carolyn Maloney, D-New York, chairwoman of the House Oversight and Reform Committee, said, "The Postal Service is holding on for dear life, and unless Congress and the White House provide meaningful relief in the next stimulus bill, the Postal Service could cease to exist."
In an April 14 constituent mailing, Rep. Gerry Connolly, D-Virginia, who chairs the Subcommittee on Government Operations, said, "It's outrageous that the Trump administration is allowing the Postal Service to collapse." He has made similar and stronger remarks in numerous interviews.
The reality is quite different. Using worst-case assumptions and the Postal Service's own limited numbers, the Lexington Institute found the Postal Service will have at least $2.4 billion in cash by Sept. 30. It will still be able to borrow an additional $10 billion from the Treasury, ensuring it has liquidity well into 2021.
There will be greater clarity about the Postal Service's finances when it is due to report its financials for April to the Postal Regulatory Commission. April will be the first full month the Postal Service operated during the pandemic.
The Postal Service and House Democrats' strategy has been to ram the measure through before it could be scrutinized.
The Postal Service should negotiate with the administration and both parties in Congress to enact holistic postal reform by May 2021.
Congress has a year to do the hard work of addressing postal reform. It should focus on that rather than appropriating tens of billions of dollars to support a failed business model.
Paul Steidler is a senior fellow with the Lexington Institute, a public policy think tank in Arlington, Va. He wrote this for InsideSources.com.
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