Dennis Sun: Slower Mail, Higher Prices

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By Dennis Sun, columnist

Those who live in rural areas, as well as those living in urban areas, cherish electricity, telephone, broadband and a prompt U.S. Postal Service. It is something we’ve become accustomed to.

So far this year, everything seems to be reliable, except for the mail service.

We hear it has big troubles. Last year, the USPS had a booming business. The agency netted a positive cash flow of almost $2 billion in the first half of the year.

How can the USPS be in such financial trouble? From what I can find, there are two looming issues – a 2006 law passed by Congress and unions.

In 2006, Congress passed the Postal Accountability and Enhancement Act during a lame-duck session which required the USPS to pre-fund 75 years worth of retiree healthcare benefits in a span of roughly 10 years.

So far, the USPS has paid $20.9 billion into benefits, but the agency deferred around $47.2 billion as of September 2019. Those delayed payments still count as an expense, meaning regardless of the agency’s financial success over the last few years, its balance sheet will continue to report enormous losses.

I’ve heard there are six unions involved in the USPS, and those unions got to Congress during the lame-duck session of 2006. Lord only knows how it got passed.

At the moment, the USPS is implementing policies to slow down mail delivery, especially in rural areas, due to a loss of revenue.

Last year, President Trump appointed a donor to become the USPS Postmaster General, along with his appointees on the board. They cut overtime and other parts of USPS spending.

All at once, the mail slowed down and their customers started complaining – rightfully so. The complaints were enough to prompt Postmaster General Louis DeJoy to suspend operational changes in August 2020 after heavy criticism over postal delays. He now plans to release a new 10-year strategic break-even plan, which includes slower mail and higher prices, potentially as soon as late March.

House Oversight and Government Reform Committee Chairwomen Carolyn Maloney (D-NY) made the case for action as the USPS faces shrinking volumes of first-class mail, increased costs of employee compensation and benefits, and higher unfunded liabilities and debt.

Maloney drafted legislation on USPS financial issues, such as eliminating a requirement to pre-fund retiree health benefits and require postal employees to enroll in government-retiree health plan Medicare for a savings of $40 to $50 billion over 10 years.

DeJoy said the reform bill, the USPS Fairness Act, “Alone doesn’t solve the problem.”

One union is asking Congress to award the USPS an additional $15 billion and called for a separate modernization grant of $25 billion. The USPS will also ask the Biden administration to recalculate pension obligations, which would save the USPS around $12 billion.

In December, Congress converted a $10 billion U.S. Treasury loan to the USPS into a grant and now the USPS wants more stimulus dollars.

The USPS just announced a Wisconsin-based maker of military trucks, Oshkosh Corp., won a long-delayed $6 billion, 10-year contract to build as many as 165,000 mail trucks.

This is mind boggling!

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