A bipartisan, bicameral group of lawmakers is once again pushing to remove mandatory payments toward the health benefits for future U.S. Postal Service retirees, aiming to eliminate a controversial requirement upon which the cash-strapped mailing agency has defaulted for years.
Congress first established the prefunding mandate in the 2006 Postal Accountability and Enhancement Act, the last major legislative overhaul of the Postal Service, and the requirement has hampered the agency ever since. Shortly after the law’s passage, the recession hit and mail volume began to decline precipitously. That trend has continued to this day, leaving USPS without the financial means to make the annual payments and forcing it to default on them while absorbing the losses on its balance sheet.
The USPS Fairness Act, introduced in the Senate this week by Sens. Steve Daines, R-Mont., and Brian Schatz, D-Hawaii, would eliminate the billions of dollars in defaulted payments from the mailing agency’s books. The Postal Service would still be able to use the funds set aside for retirees’ health care until they are depleted.
“My bipartisan bill will help the Postal Service stay in business providing world class delivery of our mail every day while also ensuring its employees maintain their benefits,” said Daines, who was one of the lead Republicans pushing for USPS to receive a cash infusion last year.
The Postal Service has lost money for 13 consecutive years and a majority of those losses stemmed from the prefunding requirement. In fiscal 2019, for example, 83% of the $8.8 billion the agency lost came from payments into its retiree pension fund and retiree health benefits fund. Critics of the mandate include a range of Republicans, Democrats, mailers and labor unions. They have estimated the law requires USPS to fund the benefits for retirees up to 75 years in the future, an obligation virtually no other government entities face.
Despite repeated bipartisan efforts, Congress has for years failed to repeal the mandate and reamortize the balance of USPS’ liabilities over a 40-year period as part of a larger postal overhaul effort. Lawmakers until recently declined to pull that provision into a standalone measure despite its overwhelming support, as stakeholders have preferred to keep it as a bargaining chip to bring diverse views together for larger, compromise postal reform legislation. Last year, however, the House passed the USPS Fairness Act by a 309-106 vote. It never received a vote in the Senate.
“There is no reason we should be requiring the USPS to pre-fund its future health and retirement benefits,” Schatz said in reintroducing the measure. “It’s an unnecessary burden that is jeopardizing its financial health.”
Reps. Peter DeFazio, D-Ore., Brian Fitzpatrick, R-Pa., Carolyn Maloney, D-N.Y., and Colin Allred, D-Texas, introduced companion legislation in the House. Maloney chairs the House Oversight and Reform Committee that has jurisdiction over postal legislation, increasing the likelihood the bill will come up for consideration. Maloney said on Monday she is “laser-focused on fixing the Postal Service’s financial problems” and that Congress should quickly pass the bill. DeFazio expressed optimism that a change at the White House could make that happen, as Biden pledged during his campaign to repeal the mandate. All postal labor unions expressed their support for the change.
“I’m hopeful that, under a Biden administration, we can finally repeal this ludicrous policy, provide the USPS with critical financial relief, and take the first step towards much-needed comprehensive reform,” DeFazio said.
Postal management has focused on that broader reform, saying repealing the prefunding mandate was just one part of legislative and regulatory changes required to put USPS on firmer footing. Lawmakers have previously included the repeal as part of a larger bill that would tweak the Postal Service’s delivery standards, enable larger price increases and establish new streams of revenue. Postmaster General Louis DeJoy has sought to implement his own cost-cutting measures, most of which were met with broad pushback and remain under legal battle. DeJoy has promised more reforms to “modernize retail and processing operations” as part of a new strategic plan USPS will release in the coming months.