The Controversial New Plan to Reinvent the Post Office

The Controversial New Plan to Reinvent the Post Office

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Plus, 'thorny' questions on state aid from Covid relief bill
Wednesday, March 24, 2021

The Controversial New Plan to Reinvent the Post Office

Saying the United States Postal Service needs to cut costs and invest in growth, Postmaster General Louis DeJoy on Tuesday unveiled a strategic plan to overhaul the public mail service and set it on a path to breaking even over the next 10 years.

The "Delivering for America" plan would take numerous steps to alter mail delivery — including raising rates, slowing the delivery of first-class mail and cutting hours at post offices around the country — while eliminating a projected $160 billion deficit at USPS over a decade. DeJoy said that if all of his proposals were carried out immediately, the USPS would be in the black within just three years.

On the investment side, the plan calls for new processing equipment, energy-efficient trucks, more extensive training, new uniforms and more sophisticated technologies for use by mail carriers. At the same time, expectations for delivery of first-class mail would be pushed from the current three-day standard to five days, though the majority of mail would still be delivered within three days.

Some of the proposed changes would require assistance from Congress. Perhaps most significantly, DeJoy wants lawmakers to end the mandate for the USPS to pre-fund its retiree health care program, which costs the mail service nearly $5 billion per year.

Critics react: Appointed by former President Donald Trump, DeJoy has been accused by some Democrats of intentionally slowing the mail in the run-up to the election last fall, and some lawmakers have called for him to be removed. Whatever the cause, complaints about delays in mail deliveries have persisted, and critics of DeJoy’s proposal expressed concerns about any further cuts to service.

House Oversight Chairwoman Carolyn Maloney (D-NY) rejected the "unacceptable decision to make permanent slower mail delivery," while Rep. Gerry Connolly (D-VA) called it "a draconian plan that guarantees the death spiral of the United States Postal Service."

The American Postal Workers Union also expressed concerns about the plan. "At a time that the public is demanding faster delivery of mail and packages, proposals that would slow the mail and reduce retail services — such as changing service standards, plant consolidations and reducing operating hours at post offices — will only have a negative effect on postal workers and the public," the labor organization said in a statement.

The bottom line: It will be hard to separate the proposal from the politics, but some parts of the plan could become reality as the mail service seeks to modernize and reduce losses. "The government has told us to break even, to be self-sustaining," Ron Bloom, a Trump appointee who chairs the Postal Service’s board of governors, told The Wall Street Journal. "They’ve also told us that the only place you get money is from the sale of your product. The only way that circle squares is if we can charge a little more for our product."

Don’t Expect the Next Spending Bill to Be Bipartisan

A group of 20 centrist senators has been meeting to see if they can make some deals to write legislation on a bipartisan basis. If successful, the senators could become a power center that helps mold successful bills in Congress in the coming months, while fulfilling President Joe Biden’s promise to work across the aisle on Capitol Hill.

That’s a big "if." The group, evenly divided between Democrats and Republicans, "is off to a rough start," NBC News’ Sahil Kapur reported Wednesday. "It is ill-defined and lacks a clear focus or method," Kapur wrote. "It has yet to show signs of success in the new presidency."

Some long-time observers aren’t surprised. Chris Krueger of Cowen Washington Research Group said in a note Wednesday that on many important issues, the parties are just too far apart on policy to reach an agreement. "Maybe we are far too cynical, BUT on the recovery bill (just like relief bill) we remain long reconciliation & short bipartisanship: GOP not going to bite," Kreuger wrote. "‘Infrastructure’ for Biden Democrats is geared toward climate & racial equity crisis. There are not 10 GOP Senators on board for that."

Much like with the $1.9 trillion relief bill the president signed earlier this month, here’s how Kreuger sees the next spending package playing out: "Biden plays ‘pragmatic deal guy’ card & try for a deal….it will fall apart…then Manchin/Sinema will try…then it will fall apart…then in early May they start the reconciliation enormous bill follows. Earmarks will help. Senate Dems are on board w/ higher taxes – only question is how high."

Yellen Says Limits on State Aid in Covid Bill Raise ‘Thorny’ Questions

The $1.9 trillion Covid rescue plan passed by Democrats provides $350 billion in direct aid to states, cities and counties, but lawmakers — worried that the money might be used for matters unrelated to the pandemic — restricted states from "directly or indirectly" using the funding to cut taxes. Treasury Secretary Janet Yellen on Wednesday acknowledged in testimony before the Senate Banking Committee that the restriction raises a number of "thorny" issues for her department as it works to issue guidance on how states can use the money they receive.

"We will have to define what it means to use money from this act as an offset for tax cuts," Yellen said, according to The New York Times. "Given the fungibility of money, it’s a hard question to answer."

Twenty-one Republican state attorneys general have asked for clarification and threatened legal action against the Biden administration over the restrictions, saying that the vague language in the legislation may be "an unprecedented and unconstitutional intrusion on the separate sovereignty of the States." They argue that the restriction, if interpreted broadly, "would represent the greatest invasion of state sovereignty by Congress in the history of our Republic."

Ohio’s attorney general sued the administration last week, arguing that the law violated the state’s constitutional right to set its own tax policies.

Yellen on Tuesday refuted those concerns. "It is well established that Congress may place such reasonable conditions on how States may use federal funding. Congress includes those sorts of reasonable funding conditions in legislation routinely, including with respect to funding for Medicaid, education, and highways," she wrote in a letter responding to the attorneys general. "Nothing in the Act prevents States from enacting a broad variety of tax cuts. That is, the Act does not ‘deny States the ability to cut taxes in any manner whatsoever.’ It simply provides that funding received under the Act may not be used to offset a reduction in net tax revenue resulting from certain changes in state law."

The law’s restrictions wouldn’t apply, she said, if states lower taxes but offset the lost revenue through means other than the Covid relief funds.

The Treasury Department has 60 days from when the law was enacted to issue its guidance on how the money can be spent.

What the states get: A new visualization by the Rockefeller Institute of Government breaks down the payments to state, county, city and municipal governments.

"California, Texas, New York, and Florida are expected to receive the largest total amounts of state and local funding," Rockefeller’s Laura Schultz writes. "On average, the funds deliver $980 per resident, with Wyoming, Vermont, and Alaska projected to receive the most per resident. States in the Northeast and upper Midwest are receiving higher than average per capita funding. States in the southeast and lower Midwest appear to be getting lower than average."

This map shows the total funds, with amounts in millions:

And here’s a look at what states get on a per capita basis:

Finally, here’s a breakdown by state of the direct aid from both the CARES Act passed in March 2020, which included $150 billion for state and local governments, the American Rescue Plan.

Quote of the Day

"Of course, our finances need to be on a sustainable long-run path and that’s a very critical responsibility for all of us. My views on the amount of fiscal space that the Unites States has, though, I would say have changed somewhat since 2017… . It’s partly because the interest rate environment has been so very low. … It certainly does not mean that anything goes. I believe in responding to a crisis with a needed surge of spending that’s temporary, that it was fully appropriate not to pay for it under the circumstances. But longer-run, we do have to raise revenue to support permanent spending that we want to do."

– Yellen, at Wednesday’s Senate Banking Committee hearing, when asked if the growing national debt is something to be concerned about. Both Yellen and Federal Reserve Chair Jerome Powell told senators that continued support for the economy from the federal government and the central bank is still needed.

Poll of the Day: Strong Support for a Public Option

A new Politico/Morning Consult poll finds that 68% of voters support a giving Americans the option to buy a government-run health insurance plan that competes with private insurance, while 55% support a Medicare for All single-payer plan. Opinions of Medicare for All remain sharply divided along partisan lines, with 79% of Democrats supporting it but 62% of Republicans opposed.

"The pandemic has exposed all of the holes in our existing health care safety net and how fragile our employer-based system is, but it doesn’t seem to be that the higher level of awareness is translating into support for Medicare for All," Sabrina Corlette, a research professor and co-director of the Center on Health Insurance Reforms at Georgetown University, told Morning Consult.

The same poll finds that, as Congress moves to reinstate earmarks, just 19% of voters say
they favor the idea of directing funds to specific recipients in congressional districts.

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