Postal Service stresses its independence as lawmakers say the administration is "inappropriately insert[ing]" itself into the agency's operations.
The U.S. Postal Service is denying the Trump administration has used its leverage in controlling the purse strings of a loan to gain improper influence over the mailing agency’s business operations, despite pushback from lawmakers who said the loan terms would “accelerate the demise of the Postal Service.”
USPS announced on Wednesday it had reached an agreement with the Treasury Department to access a $10 billion loan Congress authorized in April as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to aid the agency after the novel coronavirus pandemic led to a drastic downturn in its business. In a term sheet for the loan signed by Treasury Secretary Steve Mnuchin and made public by congressional Democrats, USPS agreed to many concessions to access the money, including briefing Treasury on key parts of its operations and disclosing new and amended agreements with its largest customers.
The loan agreement followed months of negotiations and criticism from lawmakers, stakeholders and, in at least one case, from postal management itself, that Mnuchin and the Trump administration were seeking inappropriate influence through the terms of the loan. Congress included language allowing Mnuchin to negotiate those terms with postal management. The agreement followed significant shake-ups in the agency’s leadership. After the board announced its selection of Louis DeJoy to replace Megan Brennan as the top USPS official, Deputy Postmaster General Ronald Stroman and board member David Williams both stepped down. Williams resigned specifically over the Trump administration’s heavy-handed role in the agency’s business decisions, especially as it related to the terms of the loan.
“Secretary Mnuchin and the leadership of the U.S. Postal Service appear to be exploiting this public health pandemic to hold the Postal Service to unreasonable loan terms without even consulting Congress,” said Reps. Carolyn Maloney, D-N.Y., and Gerry Connolly, D-Va., who lead the House Oversight and Reform Committee and its subcommittee on Government Operations, and Sens. Gary Peters, D-Mich., and Tom Carper, D-Del., in a joint statement. The terms of the loan, they said, “would inappropriately insert the Treasury into the internal operations of the Postal Service using onerous loan conditions.”
The agreement provides Treasury “sole discretion” to give USPS access to the funds by ensuring it is compliant with the agreed upon terms. USPS would have to maintain a reserve for repaying the loan that Treasury found acceptable; provide “historical and projected business, financial, operational, contractual and planning data” as Treasury sees fit; and regularly brief the department on a variety of additional financial and operational data. USPS must provide the details of its negotiated service agreements, in which USPS provides discounts to large customers, for each of its top 10 market dominant and competitive product contracts.
President Trump—who has spoken out against providing financial relief to the Postal Service—has taken particular interest in USPS’ agreement with Amazon, frequently repeating a debunked claim the agency is taking a loss on its deliveries for the company.
While the Democratic lawmakers said the terms threatened the Postal Service’s independence, USPS itself denied any such nefarious purpose. In a statement, the agency said its highest-revenue contracts will still be protected “under strict terms of confidentiality.”
“Providing this information is merely an acknowledgment of the fact that Treasury has been designated by Congress as the lender for the Postal Service, and it therefore has a legitimate interest under certain circumstances in understanding those factors that affect our current and projected financial position,” USPS said.
It acknowledged it must use the money from the loan for operational expenses rather than capital investments, but stressed the provision was mandated by Congress. The agency said all decision-making going forward will come from its own leadership, including its board of governors, free from any partisanship.
“Nothing in these terms confers upon Treasury any role whatsoever in Postal Service pricing, management or strategy,” USPS said.
The lawmakers rejected that suggestion and vowed to protect USPS in the run-up to November elections that promise record numbers of mailed-in ballots.
“These terms would severely limit the Postal Service’s access to capital and could accelerate the demise of the Postal Service that all Americans, especially seniors, small businesses, veterans and those living in rural communities, rely upon every day, especially during the pandemic,” they said.
While postal management said earlier this year it would likely run out of cash by the end of September, the agency later acknowledged that by accessing the $10 billion loan from Treasury and prioritizing some payments over others "it expects that it will have sufficient liquidity to continue operating through at least May 2021." USPS has also experienced a significant surge in package business since the outset of the pandemic, but management has said repeatedly it does not expect the uptick to continue nor does it make up for the downturns in the other parts of its business.
Mnuchin said USPS does not even need the loan yet, but was pleased to see it would be available to the agency when necessary.
“I look forward to continuing to work with Postmaster General DeJoy to fulfill the president’s goal of establishing a sustainable business model under which USPS can continue to provide necessary mail service for all Americans, without shifting costs to taxpayers,” Mnuchin said.
DeJoy has promised to shake up the Postal Service’s business model to squeeze out additional operational savings and in recent weeks has announced new strategies to cut costs by reducing overtime and late deliveries.
Postal management previously sought $75 billion in additional financial assistance from Congress, but lawmakers have not yet provided any aside from the loan. House Democrats and a bipartisan group of senators have pushed to give USPS $25 billion, but a coronavirus relief package unveiled by Senate Republican leaders this week did not include any such funding.