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In Blow to Privatizers, House Passes Postal Financial Relief
The bipartisan bill would ease the financial challenges that critics have used to justify calls for postal worker wage cuts and selling lucrative parts of the service to for-profit corporations.
Blogging Our Great Divide
February 05, 2020
The House voted on February 5 to remove a financial albatross around the neck of the U.S. Postal Service.
Approved by a vote of 309 to 106, the USPS Fairness Act would repeal a 2006 law that requires the Postal Service to create a $72 billion fund to pay for the cost of its post-retirement health care costs, more than 50 years into the future.
This extraordinary mandate, which applies to no other federal agency or private corporation, created a financial “crisis” that has been used to justify harmful service cuts and even calls for postal privatization. These reforms would be devastating for millions of postal workers and customers, particularly in heavily Republican rural areas.
Eighty-seven House Republicans supported the bill, which now moves to the Senate, where Montana Republican Senator Steve Daines has introduced a companion bill — S.2965.
Without the costs of this retiree health care mandate, the Post Office would have reported operating profits every year between 2013 and 2018. A Trump Task Force on the Postal Service confirmed this in a December 2018 report.
Allowing USPS once again to pay the costs of retiree health care costs on a pay-as-you-go basis as the rest of the federal government and two-thirds of private industry currently do, is the biggest step that could be taken to assure long-term financial sustainability. Current reserves of $47.5 billion could be used to pay expected pay-as-you-go retiree health care costs 10-15 years into the future.
The Trump Task Force report opposed the repeal of the current rules related to postal retiree health benefits, calling them “part of a mandate for postal self-sustainability.” However, the Task Force also recognized that the aggressive and accelerated timetable for funding the mandate has proved unworkable. They called for past deficits to be “restructured with the payments re-amortized with new actuarial calculation based on the population of employees at or near retirement age.”
While this would have a modest positive effect by spreading payments over a longer period of time, it would do little to address the underlying problem caused by USPS being burdened with a mandate that no other federal agency or private corporation faces.
This week’s House vote to completely repeal the prefunding mandate provides a ray of light for a strong future of the USPS, and helps set the service on a path to sustainability.
As bill champion Rep. Peter DeFazio (D-OR) put it, it’s time “at long last to undo this stupidity.”
In House floor debate, several supporters of the USPS Fairness Act did acknowledge that repealing the prefunding mandate is not a panacea. To put the service on a more solid financial footing, it’s critical that policymakers consider new sources of revenue that would also meet social needs, such as affordable and dependable postal financial services.
To help USPS maintain its high standard of retiree health benefits, an Institute for Policy Studies report goes beyond the need to repeal the prefunding mandate to identify several other options for lowering costs.
Rather than the story of a Postal Service facing dire financial straits, it is time we see the Postal Service for what it really is: a well-loved public institution that has risen to every challenge and innovated its way to new services even in the face of an unprecedented congressional mandate. All the while it has delivered high-quality jobs, in big cities and small towns across the country — all without a dime of taxpayer money.
The Postal Service is truly an American success story. This week the House took an important step towards ensuring that it stays that way for generations to come.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and co-edits the IPS site Inequality.org. Brian Wakamo is an IPS inequality research analyst.