How the Biden administration can save the Postal Service


A postal worker empties a blue collection box.
A US Postal Service employee removes mail from a dropbox in San Francisco on August 17, 2020. | David Paul Morris/Bloomberg by way of Getty Photos

The Postal Service has to do greater than ship mail if it needs to outlive.

In November, on the day that networks known as the election for Joe Biden, cheering crowds stopped mail vans within the streets of New York Metropolis to thank postal staff for delivering greater than 135 million mail-in ballots on time throughout a pandemic. Now, in Washington, DC, a coalition of lawmakers and advocates are attempting to drag off a unique form of feat: saving the US Postal Service.

With out assist from the federal authorities, the Postal Service may run out of money later this yr. Such a monetary disaster would imply shedding staff, limiting service, and worsening delays — and delays are already so dangerous that vacation playing cards mailed in early December are nonetheless being delivered in late January. In the long run, Congress may resolve to denationalise the Postal Service, fulfilling one of many Trump administration’s ambitions however probably denying service to tens of millions of Individuals.

Whereas it sounds a bit odd at first, an more and more widespread concept to repair the company’s monetary woes is to present it extra jobs to do. In different phrases, to grapple with its ongoing existential disaster, the Postal Service must rethink its very existence.

“There must be creativity and different issues the submit workplace can do, when it’s carried out its mission of binding the nation collectively,” Mark Dimondstein, president of the American Postal Staff Union, advised Recode. “So we’re very eager on all kinds of expanded companies.”

Concepts embrace every thing from making submit places of work perform extra like UPS shops to turning the Postal Service right into a broadband supplier. Mail carriers may additionally broaden their purview and begin delivering groceries and alcohol (a Prohibition-era legislation makes it unlawful for USPS to ship alcohol). And there’s one different factor: Put up places of work may develop into banks.

President Biden can implement a few of these ideas via govt orders, however others — specifically the banking concept — would require motion from Congress.

A cash-strapped company that’s completely able to getting cash

Conservatives have lengthy argued that the Postal Service shouldn’t attempt something new till it solves a few of its personal longstanding monetary issues. Many of those could be traced again to 2006, when a Republican-led Congress handed the Postal Accountability and Enhancement Act. This required USPS to prefund the well being care advantages it guarantees future retirees in its workforce with annual funds of about $5.5 billion. This meant that even when the company was working at a revenue, it regarded like a monetary catastrophe on paper. Then the Nice Recession occurred in 2008, inflicting first-class mail quantity to plummet and slashing the Postal Service’s income.

Issues took one other ugly flip in 2020 when the Covid-19 pandemic hit. In early February, the Home of Representatives had really voted to finish the prefunding mandate that’s pushed the Postal Service deep into the purple, however the coronavirus took over the legislative agenda only a few weeks later. The invoice has been stalled within the Senate since. In the meantime, President Trump waged a marketing campaign towards the Postal Service his complete time in workplace and even threatened to veto the CARES Act if it gave the Postal Service any assist. The Treasury Division at one level agreed to mortgage the company $10 billion — however provided that it could give up proprietary info to private-sector opponents. That mortgage was was a grant within the second coronavirus aid package deal.

One significantly troublesome growth from final yr was when a prime Trump donor and logistics govt named Louis DeJoy took over as postmaster normal in June. He carried out new, cost-tightening insurance policies that led to mail delays, main many to worry that one of many president’s cronies was attempting to sabotage the election and privatize the Postal Service. A decide ultimately suspended DeJoy’s insurance policies till after Election Day; after they had been reinstituted, mail service dropped to a traditionally low stage in the course of the vacation season. The Postal Service lately added 10,000 new jobs to its sorting amenities, however nonetheless, on any given day, as much as 2,000 postal staff are underneath quarantine, in response to the American Postal Staff Union (APWU). Greater than 150 have died because of the pandemic.

Due to these upheavals, Individuals took to social media final yr to induce their pals to purchase stamps and USPS merchandise in an try and bail out the company. However the Postal Service, which has a couple of 644,000-person workforce, wants much more assist than that. A USPS monetary planning report for 2021 reveals the company is saddled with over $160 billion in debt, a lot of which could be attributed to prefunding retiree well being advantages; the report additionally requires “important legislative reforms.” And though the Postal Service beforehand requested for a $25 billion bailout firstly, it hasn’t acquired any further aid past the $10 billion grant from the Treasury.

“Envisioning the submit workplace for the long run, you may’t simply repair the unreal bookkeeping issues after which count on the submit workplace to magically be advantageous in its earlier enterprise mannequin,” defined Porter McConnell of the Save the Postal Workplace Coalition. “I believe it must be given the power to innovate, with a view to actually begin being a powerhouse.”

Put in another way, even when Congress pulls via with a bailout and ends the prefunding mandate mess, the Postal Service nonetheless must evolve to outlive. The Save the Postal Workplace Coalition, which incorporates 300 teams, together with the APWU, MoveOn, and Shade for Change, got here collectively not lengthy after DeJoy joined the company and is looking for $89 billion in emergency aid for the company in President Biden’s first 100 days. It’s additionally pushing for Biden to nominate a “postal czar” who favors postal banking and reform-minded leaders to fill the 4 open seats on the USPS Board of Governors, which Trump had left empty within the ultimate months of his presidency. If Biden fills all of the seats, Democrat-appointed governors would make up a majority of the board, giving them the ability to take away DeJoy from workplace and reshape the Postal Service’s position in American life.

 Tom Williams/CQ Roll Name/Bloomberg by way of Getty Photos
Postmaster Common Louis DeJoy, a prime Trump donor, testified earlier than the Home Oversight Committee after imposing service cuts forward of the 2020 election.

Some concepts for a way the USPS may earn more money are fairly fundamental: Put up places of work may broaden partnerships with different authorities companies and do issues like provide driver’s license renewals along with passport companies. Or they may keep open later hours so individuals have extra time to mail packages at aggressive charges (some UPS and FedEx shops are open 24 hours, whereas submit places of work are typically 9-to-5 operations). In spite of everything, package deal deliveries are literally a uncommon shiny spot on the Postal Service’s steadiness sheet. In November, the Postal Service reported a $2 billion enhance in income yr over yr because of a virtually 20 p.c enhance in package deal quantity. Bundle quantity in the course of the holidays was up about 100 p.c.

Different concepts are extra formidable, however you may look overseas and see that they’re viable. The Postal Service has a number of the web infrastructure required for constructing a nationwide community, so it may theoretically construct out a low-cost web service within the US, which is one thing the UK’s Put up Workplace does (for about $20 a month). Letter carriers already cease at most addresses across the nation every day, so they may assist present fundamental caregiving companies for older adults, as Japan Put up does. And the USPS wants new autos, so changing its fleet of boxy, gas-powered mail vans with electrical autos may assist construct out EV charging infrastructure by organising charging stations for public use at submit places of work nationwide. This is able to value cash within the brief time period, however the charging stations may generate income for the Postal Service, whereas the extra environment friendly vans ought to lower your expenses sooner or later.

However the actually huge concept for the way to save the USPS — to ascertain a postal banking system — is less complicated to think about, if solely as a result of the submit workplace already performs a number of fundamental banking capabilities, like cash orders. Increasing that menu of companies, postal banking proponents argue, brings nothing however upsides.

The plan for postal banking

One of many greatest upsides: USPS banking may assist the at the least 7 million American households which are unbanked — that means they lack entry to a checking account or fundamental monetary companies — in response to the latest FDIC survey on financial inclusion. That quantity skyrockets once you embrace those that have accounts however use monetary companies like check-cashing and payday loans to get by. The plan for postal banking wouldn’t solely present an answer for these tens of millions of Individuals but additionally present the USPS with a monetary lifeline.

“I might think about that any submit workplace of the long run proposal has received to incorporate [postal banking],” McConnell advised Recode. “Serving the one in 4 households in America who’re unbanked and underbanked [while] offering a income stream for the submit workplace is simply too logical to go away out of any forward-looking proposals.”

The lengthy record of economic companies that submit places of work may provide consists of checking and financial savings accounts, check-cashing, low-fee ATMs, cash transfers, invoice cost, and refillable USPS debit playing cards. Providing such companies may generate some $9 billion in income for the Postal Service yearly, in response to a USPS Inspector Common report from 2014. Some back-of-the-napkin math means that this alone may cowl the prefunding mandate.

With Biden within the White Home and Democrats controlling Congress, lawmakers have the possibility to rethink current postal banking laws. Final September, Sens. Kirsten Gillibrand (D-NY) and Bernie Sanders (I-VT) reintroduced the Postal Banking Act, which might not solely carry fundamental monetary companies like low-cost financial savings and checking accounts to submit places of work but additionally take purpose at predatory practices — payday loans, high-fee pay as you go debit playing cards, overdraft charges — which have taken benefit of unbanked and underbanked Individuals. Moreover, the legislation would permit the Postal Service to supply small-dollar loans that would remove the marketplace for payday loans.

“Postal banking is a sublime and commonsense answer to issues that exist throughout the nation in city and rural states — issues which Congress has indicated it want to handle,” Sen. Gillibrand advised Recode.

A US post office in Garfield, Washington. Don & Melinda Crawford/Schooling Photos/Common Photos Group by way of Getty Photos
By legislation, the Postal Service operates underneath a common service obligation, which suggests serving even probably the most distant corners of the US.

Consider it as a public possibility for banking. And this isn’t the one strategy being floated for serving the unbanked. A job drive arrange by Biden and Sanders earlier this yr known as for the creation of so-called Fed Accounts, which might be free financial institution accounts for each American arrange by the Federal Reserve and run via submit places of work. This isn’t to be confused with Reps. Rashida Tlaib and Alexandria Ocasio Cortez’s Public Banking Act, which might allow the Federal Reserve to encourage the institution of public banks that would work together with postal banking infrastructure.

So in some form or kind, the Postal Service may play a task in all of those plans. However at this second, USPS management doesn’t appear to love the concept of including banking to its slate of choices, though it’s not solely opposed.

“Our core perform is supply, not banking. To the extent our analysis concludes that we will legally present further companies at a revenue and with out distracting from our core enterprise, we might think about these,” USPS spokesperson Martha Johnson advised Recode in November. In January, she added that current conversations with Congress didn’t contain postal banking.

Studying from the largely forgotten historical past of postal banking

If the concept of the Postal Service providing financial institution accounts sounds acquainted, that’s as a result of postal banking existed within the US all through a lot of the 20th century. We’ve carried out it earlier than, some say, so we will do it once more.

Following the Panic of 1907, which led to a run on the banks and a string of financial institution failures, Individuals developed widespread mistrust in US monetary programs. Warning of “the predatory man of wealth,” Theodore Roosevelt endorsed postal banking because the monetary disaster took maintain, and his fellow Republican William Taft offered the nation on the concept when operating for president in 1908. Taft gained the White Home, and the US Postal Financial savings System was established in 1910. It supplied financial savings accounts with a low 2.5 p.c rate of interest and a complete financial savings cap at $500 (that quantities to $14,000 as we speak), which was raised to $2,500 in 1918 (about $44,000 as we speak).

By the 1930s, the Postal Financial savings System had over $1 billion in property, making its holdings roughly 10 p.c of your complete industrial banking trade. However its success was short-lived. Personal banks efficiently lobbied to close down the Postal Financial savings System within the 1960s, and the many years that adopted noticed a sample of deregulation that left interior cities and rural areas with none banks, resulting in the rise of the $90 billion payday lending trade. The predatory man of wealth made a comeback.

“The bankers by no means favored the concept,” Christopher W. Shaw, writer of Cash, Energy, and the Folks: The American Battle to Make Banking Democratic, advised me in regards to the Postal Financial savings System. “They had been at all times towards it, they usually lobbied towards it from the beginning.”

Sen. Gillibrand has her personal tackle the matter. “It was a good suggestion then,” she mentioned, “and it’s an excellent higher concept now.”

Plenty of monetary transactions already occur in submit places of work. Billions of {dollars} value of cash orders undergo the Postal Service yearly. So if the Postal Service is on the lookout for more cash, it appears it shouldn’t should look that far.

In fact, asking postal staff to do extra issues, like function city clerks or caregivers or broadband distributors, may actually pose a problem. However with first-class mail quantity having declined by 30 p.c prior to now decade, the 600,000-plus individuals who work for the Postal Service are nonetheless well-positioned to meet the company’s mission to bind the nation collectively.

Sandy Laemmel, the president of the Nationwide Letter Carriers Union department in Detroit, Michigan, began working for the Postal Service the day after she graduated highschool 45 years in the past. Once we spoke on the telephone a couple of week in the past, she sounded optimistic about new concepts, although the banking concept particularly appeared acquainted to her, since she mentioned loads of individuals do their banking on the submit workplace, largely via cash orders, to keep away from paying steep charges elsewhere.

“Do I believe the concept of banking inside the Postal Service is possible? Sure, I do. Do I believe it’s one thing that must be explored extra? Sure, I do,” Laemmel mentioned. “The people who find themselves dealing with what goes into the mail stream are the identical individuals who could be operating the operation of postal banking. So do I believe it’s on the market? Sure. Do I believe we’ll get there? I believe we’ll.”

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