Should the Postal Service receive additional federal money?
One of the few trucks to drive the lonely dirt road to my family’s place in rural Texas lately has been the U.S. Postal Service truck. Like many jurisdictions during COVID-19, there are limited retail sales in stores — primarily for life’s bare necessities — making home package delivery more critical.
Even before the health crisis, rural communities relied on the Postal Service to deliver more than just the mail. The mailman delivers a grandmother’s heart medicine and the neighbor’s insulin, birthday gifts, care packages and even the special-order parts needed to fix the family minivan.
Those sorts of essential deliveries and that long reliance date back to the earliest days of the republic. Contrary to what is often claimed, the Postal Service was not spawned by Woodrow Wilson’s big government progressivism or as part of FDR’s New Deal.
The Postal Service practically predates America itself. Benjamin Franklin — a distinguished Founding Father — was a prominent advocate of a national postal service. He served as a colonial postmaster for the British in Philadelphia and the Continental Congress made him the nation’s first Postmaster General in 1775, years before our Constitution was adopted.
The founders so valued reliable mail service that they enshrined the postal power in Article One of the Constitution just to be sure the new nation would be guaranteed the authority to operate it. It is one of a few specific enumerated powers given to Congress in Article One, the power “to establish Post Offices and post Roads.”
Constitutionally authorized post offices are now at risk as the Postal Service teeters on the brink of financial ruin. Like other service providers, the Postal Service faces declining revenues and rising costs during the pandemic. Without an enhanced federal appropriation and additional borrowing authority, the service will be out of money and potentially out of business by Christmas if mail volumes — down 33% so far this year — continue to plummet.
As part of the COVID-19 “stimulus” package, Congress increased the Postal Service’s borrowing authority by $10 billion. But like so many things in Washington that authority came with strings attached — namely, “terms and conditions” to be imposed by the Treasury Department. Those conditions remain under negotiation, but Treasury’s own 2018 Task Force previously recommended anti-competitive measures requiring Postal Service price hikes and curtailed package delivery. Measures counter to the purpose and existence of national mail delivery.
Competitors like UPS and FedEx have lobbied for many of these regulatory changes. The Postal Service has resisted because it rightly believes that raising prices will make its package delivery service less competitive and further steer customers to their competitors. And these competitors can charge as much as 10 times to 25 times the price of the USPS to deliver the same parcels.
In the midst of an unprecedented economic downturn and elevated unemployment, consumers rely on USPS package delivery services for everything from life-saving medicines to do-it-yourself repair kits. We can ill-afford higher shipping-and-handling fees.
Reform is needed. But throwing the baby out with the bath water would harm more than help.
Without prompt congressional action, consumers may soon be surprised to discover that UPS, FedEx and Amazon do not serve non-metropolitan areas nearly as cost-effectively as their advertising might suggest. Grandma’s heart medicine might cost $24 to ship instead $4. The Postal Service has efficiencies for package delivery because it can add parcels to the daily mail rather than paying for each and every trip down each and every road — especially in the heartland. Maybe we’ll be stunned at what it costs to send a “get well” package if the mailman isn’t there to deliver it.
As the old motto goes, “Neither snow nor rain nor heat nor gloom of night …” keeps the postman away — but a financial death-spiral at the U.S. Postal Service just might.
Horace Cooper is a senior fellow with the Market Institute. He wrote this for InsideSources.com.