Trump administration rejects bailout of coronavirus-battered US postal service
Through rain, sleet, hail, and even a pandemic, letter carriers serve all addresses in the United States, but the coronavirus crisis is shaking the foundations of the United States Postal Service in new and disastrous ways.
The Postal Service’s decades-long financial woes have worsened dramatically as the volume of the type of mail that pays the agency’s bills – first-class and marketing mail – withers during the pandemic. The USPS needs an injection of cash, and President Donald Trump has blocked potential emergency funding for the agency which employs around 600,000 workers, instead repeating the false claim that higher tariffs for Internet transport companies Amazon, FedEx and UPS would adjust the service budget.
Trump threatened to veto the $ 2.2 trillion coronavirus aid, relief and economic security law, or care law, if the legislation contained money intended to bail out the virus. postal agency, according to a senior Trump administration official and congressional official who, like others in this report, spoke on condition of anonymity.
“We told them very clearly that the president was not going to sign the bill if [money for the Postal Service] was in it, “the Trump administration official said.” I don’t know if we used the v-bomb, but the president wasn’t going to sign it, and we told them. “
Instead, the senses. Gary Peters, D-Mich., And Ron Johnson, R-Wis., Added a last minute Treasury Department loan of $ 10 billion to the Cares Act to keep the agency on more solid ground until spring 2020, according to an Assistant of the Democratic committee.
Lawmakers initially agreed to a $ 13 billion direct subsidy that the Postal Service would not have to repay. This effort was blocked by Treasury Secretary Steven Mnuchin who warned that such a decision could explode the relief bill. A committee aide said Mnuchin told lawmakers during the negotiations: “You can have a loan or you can’t have anything at all.”
Only the $ 10 billion postal service loan became law, despite Mnuchin’s objections.
Without the loan, which is awaiting Treasury Department approval, the Postal Service would be “financially illiquid” as of Sept. 30, according to estimates provided to lawmakers. Defenders of the postal service fear the agency is in a vulnerable position. As its primary source of funding dwindles, the postal service could be seen as ripe for a makeover; the Conservatives have long talked about privatizing mail delivery in the United States.
The Postal Service predicts it will lose $ 2 billion every month during the coronavirus recession as postal workers maintain the nationwide service delivering mail and essential packages, such as prescriptions, food and essentials.
This work often involves great personal risks. Nearly 500 postal workers have tested positive for the coronavirus and 462 others are presumed positive, USPS executives told lawmakers. Nineteen died; more than 6,000 are in self-quarantine due to the exposure.
As the Trump administration and Mnuchin imposed private sector bailouts in the Cares Act – $ 350 billion to the Small Business Administration loan program, $ 29 billion to passenger airlines and air cargo carriers, and economic incentives for the construction, energy and life sciences industries, among others – Mnuchin signaled that any postal relief fund in a “Phase IV” stimulus plan being negotiated would amount to a poison pill.
Postmaster General Megan Brennan on Thursday asked lawmakers an additional $ 50 billion – $ 25 billion to compensate for lost revenue due to declining mail volume due to the coronavirus and $ 25 billion for ‘modernization’ – more another $ 25 billion Treasury loan and a mechanism to repay $ 14 billion public debt.
House Democrats, led by Representative Gerald Connolly of Virginia, have warned that without the funding, the Postal Service could not get past September without missing payroll or service disruptions. Senate Republicans insist the $ 10 billion Cares Law loan provided sufficient short-term liquidity, the staff member said, and the Senate would not vote to give more money to a agency unlikely to repay its loans.
“I am so frustrated at how difficult it has been for a long time to galvanize attention and action around an essential service,” Connolly said in a telephone interview. “And maybe the pandemic is forcing all of us to refocus on this service and how essential it is and how we need to fix it while we can before it becomes critical.”
Trump has long been hostile to the post, once in a tweet calling it Amazon’s “delivery guy”. The Postal Service often serves as a supplier for Amazon, UPS, FedEx and other transportation companies, providing “last mile” service in often rural and remote areas. It is a crucial service for La Poste, for whom parcel delivery is an increasing part of its activity.
Much of Trump’s slurs on the Postal Service is aimed at Amazon founder and CEO Jeff Bezos, owner of The Washington Post. Trump has argued for higher prices for deliveries on Amazon, against the recommendation of shipping experts and the agency’s own board of governors, the majority of which were appointed by Trump.
“They should go up, they need to raise the prices of these companies that come in and drop thousands of packages on the post office floor and say, ‘Deliver it,'” Trump said at a press conference Wednesday. “And they’re making money, but the post office gets killed. Okay? So they should, and we’re looking at it, and we’ve been pushing them now for over a year.”
Excessive price increases would lead private sector competitors to develop their own cheaper methods of delivering packages, said Lori Rectanus, director of physical infrastructure at the Government Accountability Office. Even if a tariff increase generates revenue, that money would be marginal to the Postal Service’s total debt, almost all of which comes from a requirement by Congress to prepay pensions and retiree health care costs for all. employees, even those who have not yet retired.
Under normal market conditions, the postal service is near equilibrium, with the exception of retirement account debt, despite the volume of deliveries which has cratered in recent years. In 2010, it delivered 77.6 billion first class mail items. In 2019, it delivered just 54.9 billion first-class items. The service processed 3.1 billion packages in 2010 and 6.2 billion in 2019, although processing packages does not bring in as much revenue for the agency as delivering first-class mail.
The coronavirus has completely changed consumer behavior and the quantity of items in the mail. Volume in the first week of March declined by 30%, postal agency officials told lawmakers. At the end of June, the agency predicts a 50% drop in volume and it could lose $ 23 billion over the next 18 months.
“We are at a critical juncture in the life of the postal service,” Brennan, the Postmaster General, said in a statement. “At a time when America needs postal service more than ever, the reason we are so needed is to have a devastating effect on our business.”
The Postal Service has faced financial woes for over a decade as digital communication has transformed and taken off, providing lawmakers with plenty of opportunities to debate its future. The postal service is so fundamental to the country that it is listed in the Constitution.
The agency’s problems have renewed conservative conversations about structural changes that would force the postal service to act more like a corporation, with measures such as eliminating the prepaid retirement requirement and easing its duty to pay. universal service deliver to every address in the United States, including those so remote.
“If we’re concerned about the Postal Service and its workers,” said Romina Boccia, an economist at the Right-Wing Heritage Foundation, “the best thing we can do is free up the Postal Service to operate as a business in order to that they can try to come back in the dark. “
Josh Dawsey and Jeff Stein of the Washington Post contributed to this report.