After nearly two decades of languishing in dire financial straits, the Postal Service’s future is looking up. On Tuesday, February 8th, 2022, the House of Representatives passed the Postal Service Reform Act with a vote of 342-92 in favor of it. Most notably, the bill paves the way for legislation that will eliminate an onerous Congressional pre-funding mandate, which has been the main source of the Postal Service’s financial trouble since 2006.
Why USPS Needs the Postal Service Reform Act
The Postal Service Reform Act is reform legislation that will set the US Postal Service back on solid financial ground, and ensure its sustainability for generations of Americans to come. The Postal Service’s financial trouble began in 2006, when Congress enacted a mandate called the Postal Enhancement and Accountability Act. This mandate required USPS to pre-fund its future employees’ healthcare and retirement costs up to 75 years in the future. Due to the sheer size of the USPS and its large number of employees, these payments were massive (in the billions of dollars each quarter).
Since Congress enacted the pre-funding mandate in 2006, USPS has operated at a net loss every year. As the years went on, the Postal Service’s losses compounded…and when USPS couldn’t meet its federally-mandated payment obligations to the Treasury, the agency defaulted on them. Thus, USPS built up a debt level that reached almost $200 billion dollars. This, along with decreasing revenue from lower mail volume, created a financial hole that USPS couldn’t possibly escape without legislative reform and Congressional aid.
Thus, nearly 16 years since the Postal Enhancement and Accountability Act became law…enter the Postal Service Reform Act. On a broad level, the act will accomplish two key strategies. It will: 1) repeal the pre-funding mandate; and 2) require USPS to enroll all its future retirees into Medicare for healthcare costs.
The Shipping Industry (and Beyond) Reacts
Within and beyond the shipping industry, business leaders, politicians, and individuals who rely on the Postal Service have all expressed support for the House passing the Postal Service Reform Act.
Brian Huseman, Amazon’s Vice President of Public Policy, stated the legislation would “ensure the agency can continue to provide reliable service to the American people and serve as an excellent delivery and logistics provider in the years ahead.”
John McHugh, chair of the Package Coalition, praised the House on behalf of the Coalition:
“The Package Coalition thanks Chairwoman Maloney, Ranking Member Comer and the House’s 100 co-sponsors for ushering the Postal Service Reform Act to passage, preserving the affordable and reliable delivery services that Americans rely on. We encourage the Senate to quickly take up this legislation, keep mail and packages delivered together, and sustain the rural communities, small businesses and American consumers who benefit most from the Postal Service.”
At the top of USPS, Postmaster General Louis DeJoy stated that the Postal Service Reform Act, coupled with his 10-year plan for USPS, “will help ensure that the Postal Service can operate in a financially sustainable manner.”
Lawmakers also gathered a series of letters from companies and outside groups to illustrate widespread support for the Act.
The Postal Service Reform Act will Save USPS $50 Billion Over the Next 10 Years
On top of eliminating the pre-funding mandate, the Postal Service Reform Act will require all future USPS retirees to enroll in Medicare. Although USPS employees have been paying into Medicare their whole careers, roughly 25% of all USPS retirees do not enroll in Medicare, despite the fact that they are eligible. As a result, USPS currently pays much higher premiums than any other public or private sector employer.
Once USPS begins requiring employees to enroll in Medicare and the Congressional pre-funding mandate is officially repealed, the agency will save exorbitant amounts of money almost right away. According to a fact sheet published by the House Committee on Oversight and Reform, these two changes alone will save USPS approximately $50 billion over the next decade.
Senate Aims to Pass the Bill Quickly
Now that the Postal Service Reform Act has passed in the House, its companion bill is expected to pass through the Senate with similar support. While the Senate is evenly divided between Democrats and Republicans, the companion bill currently has more than a dozen Republican co-sponsors, signaling strong bipartisan support and a (relatively) quick path for the bill to become legislation. When asked about the bill, Senator Chuck Schumer (D-NY), stated that the Senate will move to engage in a vote sometime in the next two weeks.