Congress Should Go Big to Improve the US Postal Service

This morning, the House Oversight Committee will hold its first hearing on the U.S. Postal Service since Democrats gained control of the presidency and both houses of Congress. Committee members will have the opportunity to question Postmaster General Louis DeJoy, who in his short tenure has severely damaged the Postal Service's reputation for timely service.

DeJoy, a former logistics executive who last year tussled with a federal judge about mail delays, may need to be reminded that he serves the public. USPS board vacancies give President Biden the opportunity to install a Democratic majority on the board this year and potentially oust DeJoy--though this would take some wrangling. The prospect of a newly configured board may make DeJoy more cooperative than he was in the lead-up to the election, when former President Trump planted fears, which mail slowdowns under DeJoy seemed to confirm, that voting by mail was iffy.

In the end, concerns that ballots wouldn't be delivered in time didn't materialize. But millions unnecessarily put their health at risk to vote in person during a deadly pandemic. And Trump's attacks on mail voting emboldened Republicans in their efforts to limit absentee voting to red state seniors and other groups who tend to vote Republican.

Looking beyond the Postal Service's dismal service record since DeJoy took over last May, the hearing will be an opportunity to address longer-term problems. Given the Postal Service's popularity with voters across the country, especially in rural America, there may be bipartisan support for undoing the damage Congress inflicted on the agency with the Postal Accountability and Enhancement Act (PAEA). The 2006 legislation imposed rigid price controls and required the Postal Service to pre-fund 75 years of retiree health benefits in 10 years, a mandate designed to obscure federal budget deficits that had nothing to do with the Postal Service. Legislation to address the retiree health care issue, which already passed the House, may finally have a chance in the Senate.

Just as damaging as the financial straitjacket PAEA imposed on USPS were limits on the scope of Postal Service activities. Among other things, these precluded a revival of postal banking, which President Biden and several members of the House Oversight Committee support. Postal banking existed in the United States until 1967 and remains a popular service in many countries. It would be a lifeline to mostly low-income and rural Americans who lack convenient access to banking services and use payday lenders and other high-cost alternatives at an average cost of $2,400 per year.

Postal banking isn't the only public service the Postal Service could provide if it weren't for PAEA restrictions. As former USPS Inspector General and board Vice Chair David C. Williams, Sen. Tom Carper (D-Del.), and others have emphasized, the Postal Service doesn't come close to maximizing the useful public services it could offer while taking advantage of underused capacity in post offices and daily delivery.

While paper mail has declined with the rise of electronic communication, USPS's parcel shipping business has increased rapidly, especially since the pandemic. Americans' increased reliance on home delivery makes sense not just as a convenience for seniors, people with disabilities, working parents, and others pressed for time or facing mobility challenges, but because one driver delivering to sequential addresses is more efficient than everyone making separate shopping trips. The environmental benefits would be even greater if USPS replaced its aging fleet with electric vehicles, which are well suited for delivery routes with frequent stops.

The Postal Service should be given the flexibility and resources to compete with other delivery services, including Amazon, which is rapidly expanding its own delivery network. This should extend beyond package delivery to nontraditional services such as grocery delivery and parcel lockers (Amazon has installed parcel lockers in its Whole Foods stores and delivers groceries from Whole Foods and Amazon Fresh).

The point isn't to just mimic Amazon but to do better. Whereas Amazon treats its low-paid drivers as gig workers, more people might trust career postal workers to unpack and refrigerate groceries while they're at work. For grocery stores and other retailers trying to compete with Amazon, there are potential synergies between daily deliveries, postal banking, and a proposed Federal Reserve e-payments system. The Postal Service could even expand its activities to building an e-commerce website to rival Amazon's, a quasi-monopoly that benefits from first-mover advantage and economies of scale in delivery similar to those enjoyed by the Postal Service--but absent the Postal Service's regulatory constraints and public service mandate.