Congress took a big step Tuesday toward reforming the U.S. Postal Service’s shaky finances and allowing the ailing agency to move ahead with modernization efforts.
The House overwhelmingly approved a bill that would save the USPS about $50 billion over the next decade.
“Today’s historic bipartisan vote brings us one step closer to finally putting the Postal Service on a sound financial footing so it can continue serving all Americans for years to come,” Rep. Carolyn Maloney (D-NY), chairwoman of the Oversight Committee, said in a statement after the bill’s passage. She told The Washington Post that the bill, which she sponsored, “will save taxpayers’ dollars while at the same time making the operations of the post office more financially stable and sustainable, and making postal jobs and employee health benefits more secure.”
The Postal Service Reform Act, approved in a 342-92 vote, would require retired USPS employees to enroll in Medicare when eligible. About a quarter of postal retirees do not enroll in the federal health care program for seniors, the House Committee on Oversight and Reform said in an outline of the reform bill. “This means the Postal Service is stuck paying far higher premiums than any other public or private sector employer,” the committee said.
The Postal Service estimates that the change could save it almost $23 billion over 10 years, and the Congressional Budget Office projected that the legislation overall would save the government $1.5 billion over a decade as postal retirees help lift Medicare’s prescription drug discounts.
The legislation would also eliminate a requirement imposed by Congress in 2006 that the Postal Service pre-fund retiree health benefits 75 years into the future.
Many experts noted that requirement went well beyond what private companies and other government entities do, and it strained the Postal Service’s finances, burdening it with liabilities that postal leaders said kept it from making much-needed operational and service improvements.
Since 2007, the Postal Service has reported net losses totaling more than $90 billion, according to Reuters. The agency on Tuesday announced a loss of $1.5 billion for the fourth quarter of 2021, compared to a profit of $318 million for the same quarter the year before. It has reportedly defaulted on payments to the retiree health fund since 2012, and the pre-funding requirement has accounted for about $153 billion of the Postal Service’s $206.4 billion in liabilities, The Washington Post reports.
The reform bill would wipe out $57 billion of liabilities to the retiree health benefit fund, and the Postal Service estimates that eliminating the pre-funding mandate would also save it about $27 billion over 10 years.
Some critics opposed the requirement that postal retirees enroll in Medicare, reportedly charging that the change amounts to a bailout. “Nothing in this bill will make the post office truly solvent,” Rep. Darrell Issa (R-CA) said. “It just wipes out and wipes away debt and shifts the burden on to taxpayers.”
The new bill also requires the Postal Service to keep delivering mail six days a week, develop an online dashboard with data on national and local service and expand special rates for local newspaper distribution.
Why it matters: “The bill, if approved by the Senate, would be the first major piece of postal reform legislation to make it through Congress in more than 15 years, and would address issues that stem from the last reform effort lawmakers passed in 2006,” writes Jory Heckman of the Federal News Network.
The legislation is reportedly the result of months of negotiations between Democrats, Republicans, Postmaster General Louis DeJoy and Postal Service unions. “We are encouraged that Congress is moving forward with postal reform legislation and strongly support enactment,” DeJoy said. “These reforms will help ensure that the Postal Service can operate in a financially sustainable manner.”
What’s next: Senate Majority Leader Chuck Schumer (D-NY) said that the bill, which also enjoys bipartisan support in the Senate, would be brought to a vote by the end of next week.
