House passes rescue plan for U.S. Postal Service

Washington Postal Scene by Bill McAllister

The House of Representatives has endorsed two actions designed to rescue the United States Postal Service from years of financial distress.

In a bipartisan vote Feb. 8, lawmakers backed a bill that would drop a costly provision that has required the agency to fund the retirement health costs of postal workers for the next 75 years.

The legislation, which now goes to the Senate, also would require new postal retirees to depend on Medicare as their primary insurance.

Together the two provisions could save the Postal Service almost $50 billion over the next 10 years, undoing some of the financial problems thrust on the agency by a 2006 postal law.

House Speaker Nancy Pelosi, D-Calif., called the vote a “long overdue action.”

It came as Democrats and Republicans united to support an agency whose products lawmakers said have been eroded by newer, faster electronic communications.

“We need to face the music,” said Rep. James Comer, R-Ky., as he rallied Republican votes.

“The days of letters are dying and may not be coming back,” he said.

The Postal Service Reform Act of 2022 cleared the House by a 342-92 vote, with 120 Republicans rallying behind the bill.

Many said they were supporting Postmaster General Louis DeJoy and his controversial 10-year Delivering for America plan to restore the agency to financial stability. Ninety-two Republicans voted against the measure.

Before the House vote, DeJoy told the Postal Service’s board of governors he believes the Senate will act on the measure “in a timely manner.”

The House action came as the Postal Service reported soaring red ink in what is usually its best quarter.

For the three months ended Dec. 31, 2021 (the first quarter of fiscal year 2022), the USPS lost $1.3 billion, compared to an adjusted loss of $288 million in the same quarter of 2020.

Revenues fell to $21.3 billion, down nearly 1 percent from almost $21.5 billion in the previous year.

The USPS blamed the swollen losses on price increases and “the inflationary impacts to operating expenses” of fuel and energy.

Looking ahead, it cautioned that its volumes “will not return to pre-pandemic levels.”

DeJoy also used the new quarterly figures to call for the enactment of changes like those considered by the House.

“We are encouraged that Congress is moving forward with postal reform legislation and we strongly support enactment,” he said.

“These reforms will help ensure that the Postal Service can operate in a financially sustainable manner,” DeJoy added.

The quarterly numbers showed volume declines in all major mail categories including packages, which had been a strength.

First-class mail revenue showed a 2.5 percent increase despite a decline of 529 million letters amounting to a 3.8 percent drop in letter volume.

Marketing (advertising) mail revenue grew by 7.3 percent, although its volume dropped by 710 million pieces, or 3.6 percent.

Shipping, which had experienced a strong surge during the COVID-19 pandemic, fell dramatically in the first quarter.

Package revenue fell by 7.9 percent, and package volume dropped by 9.7 percent, or 210 million pieces.

“The pandemic has significantly transformed the mix of mail and packages processed through the Postal Service’s network and the Postal Service anticipates that its volume and mix will not return to pre-pandemic levels,” the agency said.

Joseph Corbett, the Postal Service’s chief financial officer, added another negative point.

“Despite the record package volume during the holiday season, the overall surge in e-commerce has begun to subside,” he said.

“This shift in market trends, along with continued declines in mail volumes, our increasing costs and general economic conditions creating inflationary pressure, highlight the ongoing financial challenges the Postal Service faces,” Corbett said. 

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