Could coronavirus deal a fatal blow to the U.S. Postal Service?

A letter carrier’s mail route is structured so that it routinely takes about eight hours to complete — but that was before the coronavirus pandemic began wreaking havoc on the already beleaguered U.S. Postal Service.

“Some days I’ve never seen it like this,” said one U.S. Postal Service letter carrier who spoke on condition of anonymity out of fear of losing his job. “Prescriptions and packages are up, but the paper mail we deliver, some days it’s gone down significantly.”

In order to fill his shift, he sometimes has to include parts of an absent colleague’s route, since his own doesn’t have enough mail to deliver.

The postal service employs more than 630,000 people, but it has long been vulnerable: First-class mail, the agency’s largest source of revenue, has been in steady decline since 2001.

Now, the coronavirus outbreak is dealing what some say could be a fatal blow to the agency.

The postal service is responsible for making daily deliveries of prescription drugs, payments, newspapers, census reminders and CDC pamphlets — and will likely soon deliver Treasury stimulus checks.

Yet the same agency that will help deliver those economic relief checks is in need of major financial help itself. Postmaster General Megan Brennan estimated that the Postal Service would run out of cash by the end of September if it doesn’t receive government assistance.

In early March, when the first coronavirus cases began to appear in the U.S., the service experienced a 5.3 percent decline in overall mail volume. By March 30, that had plunged to 30 percent, according to Rep. Gerry Connolly, D-Va., chairman of the House Subcommittee on Government Operations, which has jurisdiction over the Postal Service.

Volume is expected to be down 50 percent in the second quarter, which runs April through June.

“With volume goes revenue,” Connolly said. “The postal service is really barely keeping its head above water. It’s technically insolvent.”

The service has lost $69 billion over the past 11 fiscal years, including $8.8 billion in 2019. Its total unfunded liabilities and debt totaled $143 billion at the end of 2018 — double its annual revenue.

Part of the agency’s struggle is tied to the 2006 Postal Accountability and Enhancement Act.

The law “absolutely slammed the USPS when it mandated it to pre-fund its retiree health benefits 75 years into the future with $5.5 billion annual payments for 10 years,” said Philip Rubio, a history professor at North Carolina A&T State University and a former letter carrier.

“For the last decade, they have operationally had revenue surpluses every year, or ‘profits,’” Rubio said. “But that debt obligation became a politically manufactured crisis.”

No other government agency is required to pre-fund, Rubio said.

President Donald Trump is reportedly against giving the postal service any financial lifeline, threatening to veto Congress’ recent $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act if it included bailout money for the service, according to The Washington Post.

Initially, the act included a $13 billion grant to the Postal Service that it wouldn’t need to repay. However, that grant was blocked by Treasury Secretary Steven Mnuchin. In its place was a $10 billion loan.

Trump has been a frequent critic of the service for losing “massive amounts of money” while it acts as Amazon’s “delivery boy.” He’s also repeatedly attacked Amazon founder and CEO Jeff Bezos on Twitter and has proposed raising the prices of Amazon deliveries as a fix for the Postal Service’s problems.

Connolly said the thought that Trump “would threaten the entire Postal Service because he’s got a beef with Jeff Bezos is unconscionable. It’s repugnant.”

Amazon and shipping companies such as FedEx and UPS rely on the Postal Service’s vast, established national delivery network, which can take packages the “last mile” to remote and rural areas where their own resources are limited. Unlike private carriers, the Postal Service is obligated to provide “universal service,” which means it has to deliver everywhere and can’t exclude certain areas.

The service generally enjoys bipartisan support because of its universal service mandate. It serves urban and rural areas equally regardless of demographics, which is attractive to both sides of the aisle. Even as some conservatives push for privatization, many Republicans realize the value it brings to their constituents as a provider and an employer.

For this reason, Kevin Kosar, an executive at the R Street Institute think tank who spent over 10 years covering postal issues for the Congressional Research Service, can’t imagine Trump letting the service shut down.

“It would be devastating to rural areas where there are lots of Republican voters,” he said. “Also, it’s an open secret that lots of Republicans vote by mail, the president votes by mail and elderly supporters of Trump get meds by mail.”

As The New York Times pointed out in an editorial Wednesday supporting rescue efforts, the Postal Service provides an essential service “critical to American democracy,” particularly during a pandemic in a year of the census and a presidential election.

Kosar sees Trump’s unwillingness to offer an immediate bailout as part of a negotiating tactic. He noted that Trump’s own postal reform commission issued a report last year with moderate recommendations and “nothing wild” such as complete privatization.

“It’s a political game of chicken,” Rubio said of the situation. “If House Speaker Nancy Pelosi, D-Calif., and the Democrats stick to a $25 billion bailout demand for the USPS this time around with the latest stimulus package, it would save the USPS … from having to cut service, slash jobs, mortgage its assets, or prioritize payments to vendors while holding others back.”

Rubio said getting through this pandemic means keeping the postal service intact, not just airlines, hotels and restaurants.

Aid could come in several forms, suggested Kosar, including buyouts for postal workers, limiting paper mail delivery to just five days a week, or helping the agency cover the costs of its underfunded health benefits fund.

However, he noted that the U.S. Postal Service is unique.

“Unlike the typical government agency, it was set up to be self-funding. That’s why when the rest of the government goes through a shutdown, it keeps plugging along because it self funds,” he said. “If the USPS does run out of cash and if it has fully tapped its borrowing limit and can’t raise cash by selling some assets rapidly, then it will have to close.”

Since it’s a government agency, he doesn’t see any way to put it through a bankruptcy proceeding. Without assistance, “there’s no plan B.”

Still neither he nor Connolly thinks it will come to that. While a complete collapse of the agency is unlikely, service disruptions and layoffs could result if aid doesn’t come soon.

For his part, Connolly is pushing to include aid in the next stimulus package, “Phase IV.” He foresees increased bipartisan pressure to intervene with “debt forgiveness, credit expansion and an injection of cash.”

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