By Paul Steidler
Published Sept. 29 in Real Clear Markets, and republished with permission of the author.
Effective Friday, October 1, mail service will be slower in the United States than it was in the 1970’s as slower delivery standards officially go into effect.
Mail service is getting worse despite the U.S. Postal Service (USPS) receiving $10 billion as part of the December COVID relief package and potentially up to $9 billion from the $3.5 trillion spending package to purchase electric vehicles and install related infrastructure.
The saga of USPS offers a classic lesson about why just throwing taxpayer money at a problem won’t always work and could make things worse.
Between December 2020 to February 2021 mail delivery was chaotic, with widespread delays that harmed consumers and businesses. Rather than applying the $10 billion to ways in which mail service would be structurally improved, USPS announced in a March 2021 strategic planthat it wanted to reduce delivery times on 39 percent of first-class mail. That plan goes into effect October 1.
While leading House Democrats have spoken out against this mail slowdown proposal, this week they are working to provide $8 billion for electric vehicles and related infrastructure for USPS. Talk about sending mixed messages.
USPS has defaulted on obligations to the U.S. Treasury and banked funds from the December COVID relief package, giving it $22.2 billion in cash as of June 30, 2021. It has enough to buy electric vehicles on its own if it determines that is how its customers will best be served.
USPS is already in the throes of replacing up to 165,000 delivery vehicles, the average age of which is 27 years old. The current vehicles are old, dangerous, highly polluting, and lack many standard features of today, including air conditioning.
There was a time when USPS was the model of how a government agency could be run in a fiscally responsible manner.
USPS is a unique agency of the federal government. By law, since 1970, it is supposed to be self-funded, through the sale of postage and other services. That model worked well until the mid-2000s and largely kept political interference away.
The rise of the Internet reduced demands for mail, creating a broken business model. Congress largely ignored the situation as USPS incurred $188 billion in unfunded liabilities and debts according to the U.S. Government Accountability Office.
There is bipartisan opposition to USPS’s plans to cut mail delivery times, as well as from business groups, the NAACP, organized labor, and 20 Attorneys General. 39 percent of first-class mail will be further delayed. The plan has been strongly criticized by the bipartisan Postal Regulatory Commission which can issue an advisory opinion but cannot stop USPS’s plans for slower delivery.
In fact, slowing down the mail will not materially improve USPS’s financial situation. The PRC said, “The Postal Service’s estimated annual cost savings for the proposed service standard changes do not indicate much improvement, if any, to the Postal Service’s current financial condition.”
In 2014, USPS also slowed its mail delivery standards. It has never met those slower standards and service has fallen in five of seven years, culminating in 2021’s snail-paced delivery. Lowering standards perpetuated a downward cycle then, as it will now.
In a well-functioning democracy, both Democrats and Republicans at the national level would be scrutinizing USPS about this matter and demanding it put forward a plan to improve mail service. And that still may happen if there is another December-January debacle in mail delivery as occurred a year ago.
Instead, Congress is looking the other way as USPS degrades mail service, its essential public mission which has helped bound the country together for 245 years. The $9 billion in electric vehicle money, also likely to be provided via a one-time appropriation as part of the $3.5 trillion package, will impose burdens to install electric vehicle infrastructure. Management time that could have gone to improving mail delivery will be spent on transforming the transportation network.
USPS needs fixing. Instead, the Postal Service’s poor service to the American people is being rewarded with a huge grant from Congress. Arbitrarily throwing tens of billions of dollars at USPS does not solve America’s mail delivery woes. Rather, it makes them even worse.
Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.