White House rejects bailout of postal service battered by coronavirus

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Trump has threatened to veto the 2.2 trillion dollar law on aid, relief and economic security, or coronavirus care, if the legislation contains funds to bail out the postal agency, according to a senior Trump administration official and a Congressional official.

“We told them very clearly that the president was not going to sign the bill if [money for the Postal Service] was in there, “said Trump administration official. “I don’t know if we used the V-bomb, but the president was not going to sign it, and we told them that. “

Instead, Senators Gary Peters (D-Mich.) And Ron Johnson (R-Wis.) Added a $ 10 billion last-minute loan to the Treasury Department to the Cares Act to keep the agency on more solid foundations until spring 2020, according to an aide to the democratic committee.

Lawmakers initially agreed to a $ 13 billion direct subsidy that the postal service would not have to repay. The effort was blocked by Treasury Secretary Steven Mnuchin, who warned that such a move could blow up the relief bill. A committee assistant said Mnuchin told legislators during the negotiations, “You can have a loan or you can’t do anything at all.”

Only the $ 10 billion post office loan was promulgated, despite Mnuchin’s objections.

Without the loan, which is awaiting approval from the Treasury Department, the USPS would be “financially illiquid” by September 30, according to estimates provided to lawmakers. Postal service advocates fear the agency is vulnerable. As its main source of funding declines, the postal service could be seen as ripe for a makeover; the Conservatives have long talked about privatizing mail delivery to the United States.

The postal service plans to lose $ 2 billion each month due to the coronavirus recession, while postal workers maintain the national delivery service for mail and essential parcels, such as prescriptions, food and household items.

This work often involves great personal risks. Nearly 500 postal workers have tested positive for the coronavirus and 462 others are suspected to be positive, USPS leaders told lawmakers. Nineteen died; more than 6,000 are in self-quarantine due to exposure.

As the Trump and Mnuchin administration pushed through private sector bailouts in care law – $ 350 billion in the Small Business Administration’s loan program, $ 29 billion in passenger airlines and carriers freight, and economic incentives for the construction, energy, and life sciences industries, among others – Mnuchin reported that any postal relief fund as part of a “Phase IV” stimulus package Under negotiation would be tantamount to a poison pill.

Postmaster General Megan Brennan asked lawmakers for an additional $ 50 billion on Thursday – $ 25 billion to compensate for lost revenue from lower mail volumes due to coronavirus and $ 25 billion for “modernization” – plus another $ 25 billion loan from the Consolidated Revenue Fund and a mechanism to pay down $ 14 billion in public debt.

House Democrats, led by Virginia representative Gerald E. Connolly, warned that without the funding, the postal service could not reach September without running out of pay or out of service. Senate Republicans insist that the $ 10 billion loan from the Cares Act has provided sufficient short-term liquidity, the staff member said, and the Senate would not vote to grant more money to a agency that could probably not repay the loan.

“I am so frustrated with the long-standing difficulty of mobilizing attention and action around an essential service,” Connolly said in a telephone interview. “And maybe the pandemic is forcing us all to refocus on this service and how essential it is and how we need to fix it as much as we can before it goes into critical condition.” “

Trump has long been hostile to the post, calling him once in an Amazon tweet ” delivery man. The postal service often serves as a supplier to Amazon, UPS, FedEx and other shipping companies, providing “last mile” service in often rural and remote areas. It is a crucial service for the postal service, for which parcel delivery represents an increasing part of its activity.

Much of Trump’s invective of the postal service targets Amazon founder and CEO Jeff Bezos, owner of the Washington Post. Trump has argued for higher prices for deliveries on Amazon, against the recommendation of shipping experts and the agency’s own board of governors, the majority of whom were appointed by Trump.

“They should increase, they must raise the prices for those companies that come in and drop thousands of packages on the post office floor and say,” Deliver it, “Trump said at a press conference on Wednesday.” And they make money, but the post office gets killed. Okay? So they should do it, and we’re thinking about it, and we’ve been pushing it for over a year. ”

Too high a rate hike would cause private sector competitors to develop their own cheaper methods of delivering packages, said Lori Rectanus, director of physical infrastructure at the Government Accountability Office. Even if an increase in rates generates income, this money would be marginal to the total debt of the US Postal Service, which comes almost entirely from a congressional requirement to prepay the health care costs of retirees and retirees. for all employees, even those who have not yet retired. .

Under normal market conditions, the postal service has almost reached breakeven, with the exception of the pension account debt, despite the decrease in the volume of deliveries in recent years. In 2010, USPS delivered 77.6 billion first-class mail items. In 2019, it delivered only 54.9 billion first-class items. The service handled 3.1 billion packages in 2010 and 6.2 billion in 2019, although package processing does not earn the agency as much revenue as first-class mail delivery.

Coronavirus has completely changed consumer behavior and the amount of articles in the mail. The volume in the first week of March fell 30%, postal agency officials told lawmakers. The agency expects its volume to drop by 50% in late June and could lose $ 23 billion over the next 18 months.

“We are at a critical time in the life of the postal service,” said Brennan, the director general of postal services, in a statement. “At a time when America needs the postal service more than ever, the reason we need it so much is to have a devastating effect on our business. “

The postal service has faced financial problems for more than a decade, as digital communication has transformed and taken off, providing legislators with many opportunities to debate its future. Postal service is so fundamental to the country that it is listed in the Constitution.

The agency’s problems have renewed conservative conversations about structural changes that would force the postal service to act more like a business, with steps such as eliminating the prepaid pension requirement and easing its obligation to universal service to deliver to all addresses in the United States, including those if distant.

“If we are concerned about the postal service and its employees,” said Romina Boccia, economist at the Right Heritage Foundation, “the best thing we can do is to free up the postal service to operate as a business so that they can try to come back in the dark. ”

Editors Josh Dawsey and Jeff Stein contributed to this report.



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