The Crusader Newspaper Group

Postal service ‘reform’ failing taxpayers and consumers

By Ross Marchand,

Last year, President Biden signed the Postal Service Reform Act (PSRA) into law and heralded a new era of fiscal accountability for America’s mail carrier. Clearly, the law has failed to get the U.S. Postal Service back on firmer footing.

Despite forgiving nearly $60 billion in postal debt, the agency continues to spend more than it takes in. According to Postmaster General Louis DeJoy, the service will lose an additional $60 billion to $70 billion by 2030. Taxpayers are paying the price through historic and above-inflation increases in stamp prices. Policymakers must halt the sorry slide in postal finances. PSRA-style bailouts will only result in higher costs and declining service standards for taxpayers and consumers.

Abysmal postal finances are nothing new. In the 15 years before PSRA, the service lost $100 billion despite taxpayer subsidies and preferential treatment from the Treasury. Before “postal reform,” pundits and lawmakers claimed that the service was losing money due to a legal requirement that the agency pre-fund retiree healthcare benefits. The truth is that the service had already transitioned away from the pre-funding schedule derided by critics. From 2017 forward, the service only had to amortize (gradually write off the cost) remaining healthcare-related retirement costs for their workers over 40 years, until 2056.

Meanwhile, “controllable” expenses within the agency’s control regularly dwarfed annual payments toward retirement healthcare expenses. Not surprisingly, lawmakers’ attempts to “fix” this problem didn’t solve the agency’s longstanding fiscal issues. The service has already shed $2.1 billion in fiscal year 2023, 75 percent higher than anticipated losses. And losses are up 10 percent compared to the like period last year (read: pre-PSRA).

The agency is attempting to stem these losses by once again raising rates. The Postal Service just hiked prices by 5 percent in January and wants to raise prices again in July. According to a recent report in The Nonprofit Times, “base increases are expected to include an additional 5.4 percent for first-class mail and marketing mail (formerly known as standard mail) letters, 7.4 percent or more for marketing mail flats and carrier route flats, and 8.1 percent for periodicals.” This new stamp revenue won’t be nearly enough to fund the agency’s $10 billion program to buy electric vehicles, nor will it sustain the service’s overbuilt network. Meanwhile, retiree healthcare expenses will be shifted onto Medicare’s balance sheet despite that program’s dire financial situation.

There are far better ways to bolster the Postal Service than buck-passing and blank checks from Washington. Congress can and should allow the service to invest assets into index funds, which can yield 10 percent annual returns for taxpayers and retirees. As American Enterprise Institute scholar Kevin Kosar notes, federal and state governments have been using index funds to maximize returns for years, but somehow the Postal Service is not permitted to partake.

In addition, the service should consider strategic closures of post offices. A 2021 report by its inspector general notes, “Among nearly 13,000 underwater post offices, one-quarter are within three miles of another post office and more than half are within five miles.” America’s mail carrier could shutter thousands of post offices that are losing money while maintaining easy access to nearby post offices.

The problem is that postal leadership is significantly paring back operations in large clusters instead of singling out poorly performing offices.

There’s plenty more that Congress and America’s mail carrier could do to keep the mail flowing at minimal cost to taxpayers and consumers. But, the PSRA is sending the wrong message to postal leadership that bailouts are a substitute for real reform. It’s time to deliver significant changes to the U.S. postal system.

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

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