Back in 2006, the Bush administration passed the Postal Accountability and Enhancement Act, which was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. Postal Service (USPS), a self-supporting, independent agency of the executive branch.
Over 150 changes to postal law were made including, passing a law to require the USPS to pre-fund 75 years worth of retiree health benefits in the span of ten years—a cost of approximately $110 billion, according to U.S. Congressman Peter DeFazio.
The Act set up a 10-year payment schedule back in 2006 for the USPS’s future retiree health benefits:
No other private or public U.S. entity has had to do this. If this was not a requirement, the USPS would have made a profit rather than be in a state of debt. The USPS began to default on these mandated payments in 2012 and the current Covid-19 pandemic will further harm the organization due to a decrease in demand.
“The Postal Service’s $15 billion debt is a direct result of the mandate. This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development,” says USPS’ own Inspector General.
Last year, DeFazio introduced the USPS Fairness Act which would repeal the mandate and allow the USPS to run like any other company or federal agency would.
Back in February of this year, the House of Representatives voted to end these mandatory payments, which had hampered the success of the USPS over the years, and send the USPS Fairness Act to the Senate.
According to Government Executive, the Postal Service has lost money for 13 consecutive years and a majority of those losses stemmed from the prefunding requirement. In fiscal 2019, for example, 83% of the $8.8 billion the agency lost came from payments into its retiree pension fund and retiree health benefits fund.