Stimulus Bill is not enough to save the Postal Service
by Rockwell Sands @

Stimulus Bill Isn’t Enough to Save the Postal Service

Coronavirus pandemic results in sharp decline of mail volume and revenue for the Postal Service; CARES Act doesn't give USPS enough financial stability

Last week, the historic stimulus bill known as the CARES Act was signed into law. While this $2 trillion bill aims to provide relief to individuals and small business owners across America buffeted by the recent Coronavirus pandemic, it grossly overlooks one essential organization: the United States Postal Service.

The Coronavirus Pandemic Has Caused a Sharp Decline in Revenue for USPS

While shipments of eCommerce parcels are on the rise, mail volume has sharply declined since the Coronavirus pandemic hit the United States. It makes sense when one thinks about it. The majority of businesses are either shuttering or slashing budgets. When this happens, advertising, marketing, and correspondence are the first expenses to go. That includes marketing and business mail, which accounts for a huge portion of the Postal Service’s mailing volume.

When mail volume declines for USPS, so does overall revenue. In actuality, the Postal Service still makes the majority of its money from delivering mail. Packages are a growing source of revenue for USPS, but they don’t account for the whole pie. Therefore, the severe lack of mailing volume combined with the downturn in the overall economy has hit USPS harder than other government entities.

President Trump Objected to Any Direct Cash Infusion for USPS in the Stimulus Bill

Initially, Democrats pushed for a $25 billion infusion into the Postal Service’s fund as part of the proposed stimulus bill. This would have wiped out all of the Postal Service’s outstanding $11 billion of debt. In addition, it would have also provided an adequate financial runway for USPS to keep operating throughout the foreseeable future.

However, the final bill that President Trump signed paints a vastly different picture. As part of the CARES Act, USPS now has the ability to borrow up to $10 billion from the US Treasury. That’s it. There is no cash infusion, and all the debt USPS owes still stands. In essence, that $10 billion borrowing power is just a bigger shovel for USPS to keep digging itself further into debt. While other industries are set to receive bailouts, the Postal Service is left to continue holding onto a string as a storm rages around it.

According to Congressman Gerry Connolly (D-VA), President Trump and his administration are directly responsible for the outcome. When commenting on the state of the Postal Service, Connolly provided the following statement:

“Trump personally objected to any assistance for the Postal Service.”

Without Help, USPS Will Run Out of Cash by June

Due to legislation enacted in 2006 that requires USPS to pre-fund employees’ retirement benefits 70 years into the future, the Postal Service was already in serious financial trouble before the Coronavirus pandemic. The initial proposed stimulus bill would have solved that problem and allowed USPS to keep operating. However, the actual bill signed into law doesn’t leave the organization on any more solid footing than before.

Despite its financial health, USPS keeps providing an essential service in the midst of this pandemic. Now, as more Americans shelter in place, the importance of the Postal Service will only continue to grow. People will need access to communications and essential packages such as prescription drugs and other necessities. This is particularly true in rural areas, where USPS may be the only affordable delivery option available for communities. Without a cash infusion, USPS won’t be able to provide its essential service throughout this pandemic. It won’t be just eCommerce businesses that suffer because of it. Every single American who relies on the Postal Service will hurt, too.

In the meantime, USPS has no choice but to immediately borrow additional funds to stay operational. On Wednesday, April 1st, Package Coalition Chairman John McHugh issued a statement in response to the day’s Board of Governor’s meeting:

“Today the Postal Service Board of Governors announced that in order to continue operating in the face of this unprecedented crisis, the Postal Service must borrow additional funds. Though this is completely necessary to support American consumers and the economy in a time of crisis, it will unfortunately increase the debt burden on the Postal Service.”

The state of USPS is now a national emergency, and policymakers must respond accordingly.

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