The U.S. Postal Service's Insatiable Appetite for Taxpayers Dollars

The U.S. Postal Service (USPS) just got more than $100 billion in taxpayer assistance through the Postal Service Reform Act. It is licking its chops for billions more as Congressional Democrats and the Biden Administration work to serve up a smorgasbord of new programs and funding schemes.

USPS was once the federal government’s most responsible steward of taxpayer funds, with a focused public service mission, delivering the mail.   

Under the 1970 Postal Reorganization Act, USPS is required to be self-supporting with the sales of postage and services covering the costs of operations. And from 1970-2006 it was, operating with a cumulative surplus of $3 billion during this time.

The rise of the Internet and a requirement to set aside funds for future retiree health benefits led to chronic losses at USPS starting in 2007. Some Republicans saw the Postal Service Reform Act (PSRA), signed into law April 6, as the reset button to provide USPS with financial assistance so that it could return to a focused mission and be self-supporting.

“The Postal Service is meant to be a self-funded agency that does not rely on taxpayers’ money. It is required by law to be self-sufficient and to operate on the revenue it brings in,” said Congressman James Comer, Ranking Member of the U.S. House of Representatives Oversight and Reform Committee, in championing PSRA.

Republicans should be sure to check two additional major efforts to shovel taxpayer funds at USPS.

First, Democrats are eager to provide USPS with $6 billion or more so that it can replace its delivery fleet with at least 75 percent electric vehicles and install electric vehicle infrastructure such as charging stations. Yet, USPS already plans to replace 20 percent of its fleet with electric vehicles, making it a nationwide leader among government-owned fleets for zero emission vehicles.

“The Postal Service should pay for its own capital needs, like purchasing new vehicles,” Congressman Comer wisely said at an April 5 hearing.

The audacious push to radically transform USPS’s fleet with electric vehicles is likely to lead to major service disruptions. USPS will have to address numerous operation and vehicle deployment issues, at a time when it desperately needs to focus on improving its core services.

Second, USPS claims it is entitled to $14 billion over a 10-year period due to the “unfair allocation of civil service retirement system benefits for legacy Post Office Department employees.” It is seeking to have the Biden Administration make an actuarial adjustment to these pension costs, which would significantly benefit USPS.

Republicans should demand a third-party, independent review of USPS’s claims before any funds transfer takes place. Otherwise, there could be another large, unnecessary taxpayer transfer to the Postal Service, the third in less than two years. This is a decision for accountants, not political appointees.

The good times, from a cash standpoint, continue to roll at USPS. The Biden Administration, through the U.S. Department of Health & Human Services, awarded USPS a sole-source, unbid contract to distribute “free” COVID test kits. Congress should ask for public disclosure of the cost of the contract and a study by the U.S. Government Accountability Office as to whether this was the best use of the government’s money for the distribution of COVID kits.

The Biden Administration has also proposed providing USPS with $5 billion over the next 10 years for mail-in voting and related programs. Besides concerns about federalizing elections, the funds are not necessary because the users of USPS services, citizens and election authorities, should pay the nominal cost for mail-in ballots, as has successfully been done to date.

It is time for USPS to return to its roots of being a successful, self-supporting organization. With ample recent assistance from Congress and $23.7 billion in cash on hand as of March 31, (which it obtains at low, advantageous rates from the U.S. Treasury) further taxpayer “help” is not needed. In fact, it would be counterproductive as it would impede sensible, cost efficient, and overdue reforms USPS must undertake.

Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.