WASHINGTON — Amid a cash crunch threatening to put the U.S. Postal Service out of business, the Trump administration is being accused of blocking bipartisan efforts to provide money to the agency as part of a long-sought conservative effort to privatize mail delivery.
The coronavirus pandemic has led to a precipitous drop in mail deliveries, worsening a crisis for an already financially troubled service. Last week, Postmaster General Megan Brennan said financial woes exacerbated by the pandemic could cause the agency to run out of money by October.
The $2 trillion coronavirus stimulus package passed on March 25 did not provide assistance for the Postal Service, despite bipartisan support for the funding, according to an aide to the Senate Homeland Security and Governmental Affairs Committee, which has jurisdiction over the Postal Service.
Instead, the legislation only allowed the Postal Service to borrow $10 billion from the Treasury Department.
“There was bipartisan support for direct appropriations to go to the Postal Service,” said a committee aide, who requested anonymity to discuss ongoing negotiations. Treasury Secretary Steve Mnuchin “said you can have the loan or you can have nothing.”
Yet in the weeks since the stimulus passed, the Treasury Department has not approved the loan.
A spokesperson for Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson, a Wisconsin Republican, did not respond to a request for comment.
A U.S. Postal Service worker wears a mask and gloves on April 9, 2020, in Van Nuys, Calif. (Mario Tama/Getty Images)
While the White House will not comment on the reason for the delay, American Postal Workers Union President Mark Dimondstein said the administration is using the loan to try to push privatization. He blames administration “idealogues,” including Mnuchin, for using the crisis “to push their privatization agenda.”
A spokesperson for the Treasury Department said Mnuchin and the White House are “supportive” of the loan.
“Treasury, including Secretary Mnuchin, has been in direct contact with the USPS multiple times this week, and we are working closely with the USPS to put the new $10 billion line of credit with the USPS into effect,” the Treasury spokesperson said in an email.
While the administration says it is working with the Postal Service, Ronnie Stutts, the president of the National Rural Letter Carriers Association, accused the White House and Treasury Department of blocking postal funding as part of an effort to privatize the agency.
“Everything was going good with this until they got to the White House,” Stutts said.
The Treasury Department and Trump want “to privatize postal service,” he added. “There’s no two ways about it. And when it got there, he killed it. They said no. He was not going to give us any money.”
Treasury Secretary Steven Mnuchin at a daily briefing on the coronavirus at the White House on April 2, 2020. (Mandel Ngan/AFP via Getty Images)
While the Postal Service is a quasi government agency, it is in a unique position since it has not been funded by taxpayer dollars since the 1980s. Instead, the post office relies on its own revenue from mail services.
While the Postal Service has made a profit, it has been facing financial woes since 2006, when legislation was passed requiring the Postal Service to pre-fund retirement for its workers. Prior to the coronavirus pandemic, the Postal Service was already in dire straits with its liabilities and debt vastly outpacing revenue. Last year, the U.S. Government Accountability Office described the “overall financial picture” of the Postal Service as “deteriorating and unsustainable.”
The coronavirus has dramatically worsened this situation by causing a large decline in mail volume due to decreased commercial activity. The Postal Service saw a 24.2 percent decline in delivered mail volume during the week of March 29 to April 4 and delivered-mail volume was down over 30 percent for the first three days of last week, according to a presentation made by the Postal Service and distributed to members of Congress last week
The presentation, which was obtained by Yahoo News, predicted that there would be 35 billion fewer pieces of mail in the remainder of the fiscal year, which ends in September. The Postal Service is forecasting the declines to continue through the next fiscal year leading to a $23 billion increase in net losses over the next 18 months.
The presentation said the agency hopes to receive a $25 billion grant to cover losses related to the pandemic. It also said the Postal Service needs a $25 billion modernization grant to “weather the longer term economic impacts” as well as debt relief and additional borrowing authority.
A spokesperson for the Postal Service declined to answer questions and referred Yahoo News to a statement Brennan, the postmaster general, released on Friday describing the agency’s stimulus needs.
Stutts, the National Rural Letter Carriers Association president, said that even if Mnuchin approves the loans authorized by the last stimulus, it will not be enough to solve the Postal Service’s financial problems.
“Right now it’s approximately $11 billion that we’ve defaulted and it’s about 5.5 billion each year to pre-fund retirement. We just don’t have the money,” Stutts said. “It’s not going to be paid back. And if we borrowed $10 billion, it’s just going to put us further in debt.”
President Trump at the coronavirus response daily briefing at the White House on Friday. (Yuri Gripas/Reuters)
On April 7, during a coronavirus task force press briefing, President Trump dismissed allegations he was essentially trying to end the U.S. Postal Service.
“Oh, I’m the reason the Postal Service — the Postal Service has lost billions of dollars every year for many, many years. So I’m the demise? This is a new one. I’m now the demise of the Postal Service,” Trump said.
Trump went on to blame the situation on “internet companies,” including Amazon, which he has frequently accused of not paying enough for its use of the U.S. Postal Service.
“They lose money every time they deliver a package for Amazon or these other internet companies, these other companies that deliver,” he said. “They drop everything in the Post Office and they say, ‘You deliver it.’”
While the White House and Treasury Department did not respond to questions about whether the president or Mnuchin want to see the Postal Service privatized, they have signaled support for this approach in the past. In 2018, Trump issued an executive order that created a postal task force to identify potential ways to improve the agency’s financial woes. Mnuchin led that task force, and its final report advocated selling off parts of the service to private companies.
One major concern about privatization is that the Postal Service has a universal service obligation that requires it to deliver mail for equal rates anywhere in the country. This includes rural routes that are not necessarily profitable.
Dimondstein, the president of the American Postal Workers Union, noted private companies do not have any similar obligation. Other companies, he said, can pick and choose where they want to go.
“The Postal Service can’t, shouldn’t and won’t,” he said.
Click here for the latest coronavirus news and updates. According to experts, people over 60 and those who are immunocompromised continue to be the most at risk. If you have questions, please refer to the CDC’s and WHO’s resource guides.