US Postal Service fears bankruptcy

Trump vs. the United States Postal Service | The New Yorker
US Postal worker delivering mail in the wake of coronavirus (By: The New Yorker)

By: Abigail Calandra| Head Editor

May 15, 2020

The United States Postal Service was established in 1775 by the Second Continental Congress, and laid the groundwork for our current mail system. Today, in the wake of a global pandemic, the USPS might be bankrupt by the end of September without Congressional intervention. 

As Washington begins to prepare for the next round of government relief, a Postal Service bailout is already a partisan debate. Democrats are pushing for one while the President, who is often critical of the agency, opposes it. This debate isn’t new, the two sides have quarreled for years about the best way to prepare the cash-strapped Postal Service for the impending digital future. 

The pandemic has only worsened the USPS’s financial situation with mail volume down nearly a third, due to businesses cutting back on solicitations, advertisements, and letters that make up a large portion of the mail service’s bottom line. Consequently, the USPS is predicting a $13 billion revenue shortfall this fiscal year on top of $54 billion in total losses over the past 10 years.

It’s a common misconception that email and the internet are the main culprit of the USPS’s downfall, and although they are contributing factors, the 2006 Postal Accountability and Enhancement Act is the main cause. This law requires the USPS to prepay healthcare benefits for its retirees on a 50 year schedule. It also limited flexibility through price caps on first class mail, which created massive obligations for the USPS to withhold while having a fixed income.

The effects of the Postal Accountability and Enhancement Act were almost immediate with the USPS generating an income of $900 million in 2006, to $3.8 billion in losses in 2009. The passing of this law has accounted for 74% of net losses over 13 years and the loss of over 100,000 jobs in the Postal Service. Many experts believe the USPS would still be turning profits if it weren’t for the Postal Accountability and Enhancement Act.

The Postal Service is an essential service as it has the obligation to deliver mail to every household. And the USPS delivered 1.2 billion prescriptions in 2019 and almost 100 percent of Veterans Affairs’ prescriptions. The collapse of the Postal Service would be detrimental especially during an election year, census year, and in the midst of the pandemic. 

Millennials trust USPS more than Amazon: Morning Consult study
President Trump is critical of the USPS’s close relationship with Amazon (by: CNBC)

The Postmaster General has asked Congress for $89 billion in relief, however, Trump is withholding that aid because he claims the USPS is a “joke.” Others have looked towards the Postal Service’s close relationship with Amazon which is owned by Jeff Bezos, who also owns The Washington Post, a newspaper critical of Trump’s politics. Not to mention, Trump replaced the current Postmaster General with Louis DeJoy, a major Trump donor. Which insinuates that Trump may be capable of bending the Postal Service to his will. Trump has also recommended that the USPS raises the price of a package four times, but the Postal Accountability and Enhancement Act makes it illegal to price parcel delivery below its cost. 

Despite being a federal agency the USPS is a self-funded agency, meant to pay for itself through its postage and services. The Postal Service has even engaged in side hustles to attempt to better the financial situation, including a mail-themed clothing line at Forever 21. 

One solution for the USPS is to expand their services to issue hunting and fishing licenses. Their best option, though, is postal banking. This includes small services such as opening saving accounts and check cashing. This isn’t out of the Postal Service’s wheelhouse either, they provided these services until the 1960s. It will also benefit the 25% of the US population that lives in under banked areas.

Individually, we can all help the Postal Service through the purchasing of stamps. But the USPS, one of the United State’s oldest and most reliable entities, will not be back up on its feet without government aid. 

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