H.R. 3076: Postal Service Reform Act of 2022

The Postal Service Reform Act would repeal a requirement in 5 U.S. Code 8909a(d) that the USPS make annual payments to the Retiree Health Benefits Fund, from which benefits are paid to retired workers. The Postal Service Reform Act essentially sets up taxpayers to bail out this fund.

In December 2006, Congress passed the Postal Accountability and Enhancement Act, which included a provision that required the U.S. Postal Service to make annual payments to the Retiree Health Benefits Fund. Congress set a specific dollar amount to be paid on September 30 of each year between 2007 and 2016. After that time, annual payments would be based on a formula. The reason Congress took such a step was because of the Retiree Health Benefits Fund’s massive shortfall. As former Rep. John McHugh (R-N.Y.) noted during the discussion of the Postal Accountability and Enhancement Act, the Retiree Health Benefits Fund faced a “roughly $60 billion” in unfunded obligations at the time.

This change was made explicitly because the previous pay-as-you-go system was failing. Repealing this change would simply return USPS to that old system, with no efforts made to actually increase the solvency of the Retiree Health Benefits Fund.

The U.S. Postal Service made these annual payments required by the 2006 law through 2010 but has since simply defied the law. Naturally, the Retiree Health Benefits Fund has grown more unsustainable since then. In August 2018, the Government Accountability Office (GAO) released a report noting that “[t]he financial outlook of the Postal Service Retiree Health Benefits Fund (RHB Fund) is poor.” Recently, the Retiree Health Benefits Fund faced an unfunded liability of $70 billion. According to the GAO, the Office of Personnel Management projected that the fund would be depleted in FY 2030 if the U.S. Postal Service did not make statutorily required contributions.

Make no mistake about it. The Postal Service Reform Act sets the stage for a taxpayer-funded bailout of the Retiree Health Benefits Fund. There are serious and fiscal proposals to address the issues that face the U.S. Postal Service. The bill being voted on this week is not one of them

Erasing the USPS’s debts will not stop the red ink from bleeding on its books. Fiscally damaging practices, like underpricing USPS packages by $1.46, are sure to continue in perpetuity unless something is done. The fiscal relief that the Postal Service seeks would do nothing more than force everyone else to pay for the collateral damage.

As if it weren’t enough, the Postal Service Reform Act also mandates the creation of an integrated network for the delivery of market-dominant and competitive products. Essentially, it gives the USPS the authority to bundle expenses and earnings of its package business alongside its letter mail service. An integrated network would make it impossible to track where the USPS earns its money and where it does not.

This bill absolves the USPS from doing its job to manage costs and revenues responsibly and enables shady accounting mechanisms that do nothing to fix their troubled financial and accounting shortfalls.