Congress Passes USPS Reform Bill That Will Actually Fix Things

The Postal Reform Act, which is on its way to Biden’s desk for signing after passing the Senate, undoes some of the damage Congress did in 2006.
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Credit: Brandon Bell via Getty

The United States Congress passed a useful, decent, truly bipartisan bill that the president is expected to sign into law that will solve a real problem with American society and put a treasured American institution in a better place. No, this is not The Onion. 

The bill in question is the Postal Service Reform Act, which passed the House a month ago 342-92 and the Senate last night 79-19. It repeals the disastrous healthcare prefunding mandate Congress enacted in 2006, which forced the USPS to “prefund” its health care retirement bills to the tune of $5.5 billion per year (out of an annual revenue of some $70 billion a year), a method of funding retirement no other public or private entity uses. The USPS dutifully paid that amount to the federal government for a few years, putting some $18 billion in a low-yield federal account. In 2011, it stopped making payments, both because it could no longer afford to and it also recognized there was no penalty for failing to do so.

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But that prepayment requirement—foisted upon the USPS to plug a federal budget hole created by the USPS accidentally overpaying into its federal retirement plans for decades—was a disastrous turn for a postal service already struggling with decline in mail volumes due to the internet and the Great Recession, but before online shopping resulted in a surge in package volumes. 

The new bill would wipe that debt, giving the USPS more borrowing power and a relatively solid financial footing. It will also have retired postal workers transition to Medicare, reducing the postal service’s healthcare costs. Republicans signed onto the bill despite this provision because postal workers pay into Medicare just like every other Americana worker.

The Postal Reform Act also partially reverses one other controversial aspect of the 2006 law that banned the post office from providing non-postal services. The reform bill allows the USPS to establish programs with local and state governments or other agencies “to provide certain nonpostal products and services.” This will likely mean programs like providing hunting and fishing licenses or renewing driver’s licenses, not more progressive efforts like postal banking. The bill also doesn’t include anything related to the controversial delivery fleet purchase because it would have jeopardized support from both Republicans and more conservative Democrats. 

Despite this bill being widely celebrated across the landscape of postal observers and politicians, it is with some hesitancy I celebrate it. Because people celebrated the 2006 law when it passed, too. At the time, Senator Susan Collins, the bill’s sponsor, called it “great news” that “will ensure the continuation of universal postal service at an affordable rate.” Few, if any, even noticed the prefunded healthcare mandate; the law’s main focus at the time, at least in the press, was about rate regulation and service standards. But for now, it certainly looks like Congress has attempted a novel strategy of overwhelmingly passing an obviously good bill. It’s a bold strategy. Let’s see how it plays out.