The fate of the USPS may be on the ballot in November
The U.S. Postal Service has made it explicitly clear: Without a Hail Mary pass from Congress, it will likely run out of money before September of this year.
In order to stay afloat, advocates for the Postal Service are asking Congress for $25 billion in immediate assistance, a $25 billion modernization grant to overhaul infrastructure, and $14 billion in debt forgiveness. The Postal Service Board of Governors, which consists of three Republicans (all of whom were appointed by President Donald Trump) and two Democrats, unanimously approved of the ask earlier this month.
Ideally, that would be enough to sustain the Postal Service until the election of presidential candidate Joe Biden, who has said he plans to back legislation to support the post office and keep it public.
“The U.S. Postal Service is an important part of American life. But, with Donald Trump in the Oval Office, our post offices are under attack,” Biden wrote in a letter to his supporters last week. “Trump has called for rolling back protections for postal workers and privatizing the USPS…Trump’s plot to privatize the USPS couldn’t come at a worse time,” he continued. “So we need to take action now to protect the Postal Service.”
While the post office has not been included in any stimulus packages so far, Congressman Emanuel Cleaver of Missouri still remains hopeful that the Postal Service will get something in the next round of funding. He sent a letter—along with 122 of his congressional colleagues last week—to House leadership, demanding a bailout.
“If the Postal Service is privatized, rural America will be traumatized,” he tells Fortune. “It means that rural America, which already thinks it’s being ignored, will be given a clear and unambiguous sign that they’re right. That they’re not only ignored by the Congress of the United States but that they’re being placed in harm’s way. So not only do they not get mail, they don’t get medications, they don’t get the opportunity to communicate.”
In a briefing with members of Congress earlier this month, Postmaster General Megan Brennan outlined the full extent of the problem. While the Postal Service was losing money at an unsustainable pace before the COVID-19 crisis, it has seen an insuperable and precipitous drop in mail volume since.
There was a 5.3% decline in mail volume, said Brennan, during the first month of the pandemic in the United States. By April, it had grown to 30%. It will only get worse, she predicted: At the end of the third quarter, it will be a 50% drop, and at the end of quarter four, 57%. For this fiscal year, which ends Oct. 1, the Postal Service is predicting a revenue loss of $13 billion, the result exclusively of COVID-19. That’s on top of the nearly $9 billion the USPS had been losing annually before the pandemic.
Post office workers are considered essential during COVID-19 shutdowns. Over 1,800 postal workers have either tested positive or are presumed to be positive with the virus, and there have been over 30 deaths related to COVID-19, according to union officials.
Vermont senator and former presidential candidate Bernie Sanders held a virtual town hall last week with postal union leaders. “At this moment,” he said, the USPS “is facing very difficult challenges.”
But the latest congressional relief package, signed into law by the President on Friday, when he went out of his way to call the USPS “a joke,” provides no support for the Postal Service.
“As far as I’m concerned the Postal Service got screwed three and a half times now,” said Paul Hogrogian, president of the National Postal Mail Handlers Union.
If additional funding is not provided, the USPS would have no way forward without significantly reducing staff and cutting some services. The post office currently employs 640,000 staffers, many of whom are veterans and people of color.
The Postal Service is required by the constitution to serve everyone in the country equally and with uniform rates. They are the only universal provider of mail service and have been a low-cost anchor for the mailing industry, helping to keep private mail service rates down. A recent analysis by the Institute for Policy Studies found that, without the USPS, 70 million more Americans would have to pay hefty surcharges for deliveries.
If the Postal Service were to halt some or all of its deliveries, “rural America would be left out of the equation or be forced to pay exorbitant prices,” explained Hogrogian. Prescription drugs, Social Security, and pension checks would no longer be directly delivered to them, he said, noting that 40% of Americans still pay and receive bills through the U.S. mail.
“So FedEx and UPS get to cherry-pick what markets they want to play in, and if it’s unprofitable or too remote or too expensive, they get to not do it,” said Rep. Gerry Connolly, chairman of the Subcommittee on Government Operations.
“This isn’t just a nice thing to do for the Postal Service. This is essential to every household and every business in America that counts on daily delivery of their prescription drugs, foodstuffs, medical equipment, supplies,” said Connolly. “As we speak, people are ordering masks through the mail, medical supplies, and prescriptions, and we’re even adding to the burden by voting through mail.”
The only way to save the Postal Service, said Fredric Rolando, the president of the National Association of Letter Carriers, is to participate in the upcoming presidential election and vote for Biden. Rolando said he’s focused fully on short-term measures to keep the Postal Service alive, but even potential bailout money won’t provide long-term relief.
The USPS is currently the most trusted government agency in the country with a 90% approval rating divided almost equally among both Democrats and Republicans. While the agency is federally run, it has not received taxpayer funding for more than 30 years and is considered financially independent.
But the agency has been rapidly losing money since a 2006 law, passed with the support of the George W. Bush administration, required the agency to pre-fund employee retiree health benefits for 75 years in the future. That means the Postal Service must pay for the future health care of employees who have not even been born yet. The burden accounts for an estimated 80% to 90% of the agency’s losses.
Postal advocates believe that the pre-funding initiative, which they call “onerous” and “draconian,” was intended to force the Postal Service to privatize. They also say that without the stimulus money, taxpayers will be forced to pay for retiree benefits anyway.
“The line in 2006 was that the Postal Service has to pay upfront now because ‘we’re not sure if they’re going to be around in 20 years, and then the taxpayer will be stuck with the bill,’” said Hogrogian. “But that’s exactly what’s going to happen now if we’re not given this infusion.”
And while $50 billion plus debt forgiveness to the tune of another $14 billion may seem excessive, Connolly said perspective matters, especially in light of the $2.2 trillion stimulus bill recently passed by Congress. “It’s a big ask, but you have to put it into context,” he said.
“Think about the airline industry: Here’s an industry that gouged customers over the last five years to maximize profits, and they’ve had record profits over the last five years. And what did they do with those profits? They used $42 billion collectively to buy back stock. Not a productive activity,” said Connolly. “And then when the pandemic hit, they came hat-in-hand asking for $50 billion for a bailout. So if we can do that for the airline industry, and we did, then we can certainly do something comparable for the Postal Service.”
There was initial bipartisan interest in a bailout of the USPS by Congress, but according to reports by the Washington Post, Trump and Treasury Secretary Steven Mnuchin stepped in and threatened to veto the entire bill if it included the final agreed upon $13 billion direct grant to the USPS. Instead, they allowed only an additional $10 billion loan from the Treasury, but that comes with strings attached.
Connolly said that the loans taken from the Treasury usually work to take autonomy away from the USPS and bring it closer to privatization. “We are very worried that Treasury will pull our arm, and we’re going to resist it,” he said. “Mnuchin [and the President have] an agenda. You’ve got to remember that they don’t like the Postal Service as conservative Republicans because it’s big, it’s quasi-governmental, and it’s unionized.”
The Trump administration is supportive of privatizing the post office, and Hogrogian said that he was upset by “the shamefulness of them trying to use this crisis to carry out their political agenda, rather than set good policy on behalf of the people of this country.” A 2018 report written by a Treasury Department task force recommended selling off parts of the USPS to the private sector.
The Trump administration’s attempts to use the Postal Service as a “fiefdom” for “long-term political ambitions,” said Cleaver, “gives off a bad odor.”
The President has long advocated against the Postal Service. He does not support vote-by-mail initiatives as a response to the COVID-19 crisis, which he falsely claims would lead to an increase in voter fraud, and he also believes that the USPS should charge Jeff Bezos and Amazon more money for mail services than they do. The President reportedly personally pushed the Postmaster General to double rates for Amazon deliveries.
Still, Cleaver thinks there is a way to negotiate a bailout into the fourth stimulus bill. “It depends on how desperate we are to get the stimulus through, and it also depends on what else is on the table,” he said. “We’ve been meeting almost daily discussing it. Now it’s reached a point where people who are interested in getting that rural vote are going to have to think deeply about how they’re going to vote on this.”
Connolly also thinks negotiation is possible. “We had great success in the CARES Act in injecting things that the White House and Secretary Mnuchin and Senate Majority Leader Mitch McConnell did not want to accept,” he said. Democrats, for example, were able to negotiate $150 billion for state and local governments and $400 million to help electoral boards and support voting by mail.
Negotiations for stimulus bill four are currently in committee.
“You know, we have a divided Congress and a divided government, and to get things done there’s going to have to be give and take,” Connolly said. “Republicans and the White House are going to have to give postal relief, and they’re going to have to put their agenda aside for the sake of the country.”
More politics coverage from Fortune:
—How Fortune 500 companies are utilizing their resources and expertise during the pandemic
—Why charging members of Congress with insider trading is so fraught
—To fight tomorrow’s pandemic, we need to think like the military today
—If you’ve been a little busy lately, here’s what’s going on with the 2020 election
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: As unemployment skyrockets, the labor market’s future looks grim
Get up to speed on each morning with Fortune’s CEO Daily newsletter.