Postal Service Seeks $10 Billion From CARES Act

Democratic Congressional leaders asked the administration to quickly disburse a $10 billion loan to the United States Postal Service (USPS) that was included in the most recent Coronavirus stimulus package.

U.S. Sens. Gary Peters (D-Mich.) and Tom Carper (D-Del.) and U.S. Reps. Carolyn Maloney (D-N.Y.) and Gerald Connolly (D-Va.) sent a letter Friday to Treasury Secretary Steven Mnuchin requesting the government  quickly provide the loan in order to maintain operations for all communities during the public health emergency.

Peters and Carper serve as Ranking Members of the Homeland Security and Governmental Affairs Committee and Senate Committee on Environment and Public Works, respectively. Maloney is chair of the House Committee on Oversight and Reform while Connelly serves as chair of the House Subcommittee on Government Operations.

USPS notified Congress on March 20 that due to COVID-19 and resulting decline in revenue, it could be forced to limit or case operations by the end of the fiscal year. Its projections indicated that USPS could lose $12.6 billion in revenue this fiscal year.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed March 27 included a provision allowing the postal service to borrow up to $10 billion from the Treasury Department, if the agency determines it “will not be able to fund operating expenses” without assistance.

The legislation authorizes the Treasury Secretary and Postal Service to agree to terms of the loan. The letter to Mnuchin called on him to make these funds available to the USPS in a timely manner, under fair terms and conditions that “comply with existing statute and the intent” of the CARES Act.

“We urge you to make this loan as soon as possible, with terms that respect the Postal Service’s status and authorities as an independent establishment of the executive branch,” the members wrote in their letter to Mnuchin.

The USPS notified their committees on March 20 that it will run out of cash due to a potential decline in revenue of $8 billion to $10 billion and may have to limit or cease operations by the end of this fiscal year (Sept. 30). USPS is incurring additional costs during the pandemic as it continues to provide safe deliveries and services, including costs of additional facility cleanings, purchasing supplies, and training staff on new procedures, in addition to regular operating costs.

The House Oversight Committee initially pushed for $25 billion in appropriations as well as forgiving $11 billion in debt owed to Treasury. The Senate reduced that to $13 billion in appropriations. Mnuchin promised $10 billion in additional lines of credit but no appropriations.

USPS had about $9 billion in cash on hand at the end of February and combined with the $10 billion credit and $4 billion in already existing borrowing authority “is still quite a bit of liquidity to deal with,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers in Washington, D.C. The House committee shared the worst-case scenario, Kearney said, but the Postal Service hasn’t made any direct projections of volume or running out of cash. Nonprofit mailers, he added, shouldn’t worry about USPS shutting down as it’s an essential government service that everyone understands is much needed.

House Speaker Nancy Pelosi (D-Calif.) is pushing a fourth stimulus package that specifically includes a USPS appropriation, according to Kearney, but Senate Majority Leader Mitch McConnell (R-Ky.) has advocating waiting on the last $2.2-trillion CARES Act to take effect before working on new legislation.

Any Postal Service appropriation is most likely going to have to be part of a larger piece of legislation related to the COVID-19 crisis, Kearney said. In part, timing driven by when larger legislation will start moving.

Leadership at some of the large nonprofit mailers see headlines about USPS losing revenue and consider plans to move fundraising and publications out of the mail, Kearney said. “This is just part of the political process,” he said. The government owns the Postal Service and it’s an essential infrastructure to the nation, he added, suggesting nonprofits continue with their mailing programs. “It might even be an opportunity, with less mail in the mailbox, to stand out more with appeals,” Kearney said.