Pelosi Looks to Deliver $25 Billion for USPS

Pelosi Looks to Deliver $25 Billion for USPS

Printer-friendly version
Plus, McConnell isn't sure there will be another coronavirus bill
Monday, August 17, 2020

Pelosi Looks to Deliver $25 Billion for Postal Service

The House is set to vote Saturday on legislation that would block operational cutbacks to the United States Postal Service and add $25 billion in funding to help prop up the service ahead of the November elections, which is expected to see a surge of mail-in ballots.

White House Chief of Staff Mark Meadows dismissed the Democratic plan as "partisan," according to Politico. "It's not only unrealistic, it's unnecessary," he told reporters Monday. Other Republicans have expressed support for providing the Postal Service with emergency funding.

The Postal Service has become a political flashpoint as President Trump has railed against voting by mail, which he has claimed without evidence could lead to widespread fraud.
Postmaster General Louis DeJoy, a Republican donor appointed to the position by Trump, has sparked controversy by instituting operational changes that he has described as necessary cost-reduction efforts. Critics suggest ulterior motives, and ethics watchdogs have raised concerns that DeJoy may have conflicts of interest since he hasn’t divested a multimillion-dollar stake in his former company, XPO Logistics, which processes mail for the Postal Service.

Post offices across the country have reported delays in mail delivery in recent weeks, and the Postal Service recently sent letters to 46 states and the District of Columbia warning that it cannot guarantee all ballots cast by mail for November’s elections will arrive in time to be counted, The Washington Post reported Friday.

Trump last week acknowledged that his efforts to block funding to the Postal Service would leave it unable to handle the increase in mail-in voting.

Democrats and others pounced on Trump’s comments as evidence that he is trying to "sabotage" the election and disenfranchise voters for political reasons, and House Speaker Nancy Pelosi called for the House to return from its August recess to vote on the Postal Service legislation.

The $25 billion Democrats are looking to provide the USPS is the same amount they included in a coronavirus relief bill that passed the House in May. Democratic leaders and White House negotiators had reportedly agreed to $10 billion in USPS funding during discussions about the next coronavirus relief package, but those talks broke down without the parties reaching a broader deal. Pelosi has emphasized that the Postal Service’s bipartisan, Trump-appointed board of governors had requested an emergency cash infusion of $25 billion earlier this year.

Trump indicated Friday that he would be open to providing more funding for the Postal Service, and more than $3 billion for mail-in balloting and other "election resilience" measures — but that’s if Congress agrees to his administration’s coronavirus relief plans. On Monday, Trump told "Fox & Friends" that he’s just trying to fix the Postal Service. "This has been one of the disasters of the world, the way it’s been run," he said. In a tweet later on, he added: "The U.S. Post Office (System) has been failing for many decades. We simply want to MAKE THE POST OFFICE GREAT AGAIN, while at the same time saving billions of dollars a year for American Taxpayers. Dems don’t have a clue!"

What’s next:
Any legislation passed by the House would also have to clear the Senate. Majority Leader Mitch McConnell (R-KY) on Monday said Republicans are willing to provide more money to the Postal Service, even as he made clear he doesn’t share the concerns about election security raised by Trump. But he also gave no indication that he’s going to give in to pressure to have the Senate return from its recess to address the issue.

"The Postal Service is going to be just fine," McConnell told reporters in Kentucky. "We're going to make sure that the ability to function going into the election is not adversely affected and I don't share the concerns that the president ... has mentioned." McConnell noted that the Trump administration has already indicated it is willing to provide $10 billion to shore up the Postal Service.

While the fate of the legislative effort is unclear, Democrats are also pursuing oversight investigations. DeJoy and Robert Duncan, the chairman of the U.S. Postal Service Board of Governors, have agreed to testify next week before the House Committee on Oversight and Reform.

McConnell Not Sure There Will Be Another Covid Relief Bill

Senate Majority Leader Mitch McConnell (R-KY) said Monday that while he thinks the country needs another coronavirus relief package, he’s not sure it will happen.

"We do need another bill and I'm hoping that this impasse will end soon," McConnell said at an event in Kentucky, The Hill reported. But he also said that, "as of the moment, today, I can't tell you with certainty we're going to reach an agreement," while noting that the coming elections will only make the negotiations more difficult.

Warnings on the lack of fiscal support.
Economists have expressed concerns about the withdrawal of federal stimulus spending over the last few weeks, especially the abrupt end in July of the $600 per week payments Congress had provided to the unemployed. Ernie Tedeschi of Evercore ISI said Monday that by his calculations, total unemployment payments have dropped by about $15 billion per week since the enhanced benefits expired. "That's the equivalent of almost 4% of GDP," he tweeted. (See his chart below.)

Analysts at the Peterson Institute for International Economics warned last week that the failure of lawmakers to agree on a new coronavirus relief package that renews expiring programs "threatens to undo the stimulus effect of the programs and exacerbate the economic damage from the lockdown." Assuming no further federal assistance is provided, the analysts estimated that the recession would be deeper than otherwise, with a 4% to 5% loss of GDP and a similar increase in unemployment.

"US policymakers should at least maintain the earlier levels of income support to prevent further induced economic damage," the analysts argued. "In the current depressed state of the economy, destimulation is a very poor policy choice."

Cities Brace for Coronavirus Budget Cuts in Red States, Too

Many U.S. cities are experiencing a revenue crunch due to the coronavirus pandemic, forcing sharp budget cuts that will stretch into next year, according to a new analysis that will appear in the National Tax Journal.

Cities that rely heavily on tourism (e.g., New Orleans) or assistance from state governments (e.g., Rochester, New York) will be particularly hard hit, the study found, with budget cuts of up to 20% in the next fiscal year relative to pre-pandemic spending levels.

And contrary to charges made by President Trump that cities are suffering because they were badly run by Democrats, the drop in revenues is very much a bipartisan affair, with some of the worst-hit cities located in both Democratic-controlled New York and Republican-dominated Florida.

"The Great Recession was a story of long, drawn-out fiscal pain — this is sharper," said economist Howard Chernick, one of the study’s authors.

City leaders make the case for a fiscal lifeline.
Reporting on the analysis Monday, Emily Badger and Quoctrung Bui of The New York Times said that if Congress is unable to make a deal to aid cities — an issue that has divided Democrats and Republicans so far — the budget cuts will be "enough for residents to experience short-staffed libraries, strained parks departments and fewer road projects."

Mayor Lovely Warren of Rochester, New York, explained to the Times why her city needs federal assistance:

"We can’t produce money, we can’t borrow our way out of this, we can’t tax our way out of this. But our residents expect that the trash will be picked up on trash day. They expect that the snow will be plowed when it snows. They expect that when they call 911 that a police officer will show up. For Washington to ignore that reality — it hurts."

Dave Massaron, the chief financial officer for Detroit, argued that dealing with the fallout from an international pandemic is beyond the ability of individual cities. "This is really what the federal government was built to do: to handle these events that are bigger than the borders of a city and bigger than the borders of a state," he said.

Pentagon Could Cut $2.2 Billion from Military Health Care

Officials at the Defense Department have proposed to cut $2.2 billion from health care spending over the next five years, Politico reported Sunday.

The proposed cuts are part of an initiative by Defense Secretary Mark Esper to cut unnecessary spending at the Pentagon. But two senior defense officials told Politico the cost-cutting efforts have been executed too hastily, and that the proposed cuts to health care spending would harm patients.

The $2.2 billion in cuts would be imposed on the defense health system, which serves nearly 10 million active duty personnel, retirees and family members. Leaders would be tasked with finding spending to cut — and that’s where the problem may arise.

"A lot of the decisions were made in dark, smoky rooms, and it was driven by arbitrary numbers of cuts," a senior official told Politico. "They wanted to book the savings to be able to report it."

Another official warned that the proposed reductions would reduce the Pentagon’s medical capabilities while saving little money in the end, since the military health system would become more reliant on relatively expensive private health networks to provide care.

The Defense Department said the matter was still under review.

Read the full report at Politico.

Reminder: The Democratic National Convention kicks off tonight at 9 p.m. ET. (Also, the NBA playoffs start tonight. The ratings for both may be interesting to watch.)

Send your tips and feedback to Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.

Views and Analysis