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Postal Reform Will Finally Become Law After Senate Passes Long-Sought After Legislation

Congress approves taking significant debt off USPS’ books, shifting retirees to Medicare.

The Senate on Tuesday by a 79-19 vote passed a sweeping reform of the U.S. Postal Service to eliminate much of its debt and restructure some of its operations, sending to President Biden’s desk the first major overhaul of the mailing agency in more than 15 years after more than a decade of billion dollar losses. 

The 2021 Postal Service Reform Act has been more than 10 years in the making, with various efforts to put the mailing agency on firmer financial footing repeatedly failing or stalling out. The measure won broad bipartisan support, though its passage was delayed last month by a single Republican senator. Congress last passed major postal reform in 2006, though the agency’s finances collapsed shortly thereafter and lawmakers have struggled to address the situation ever since.

The bill will make sweeping changes to USPS operations, though its scope is slightly pared back compared to previous failed attempts at postal reform. The core of the bill will require new postal retirees to enroll in Medicare for their health care and force most postal workers to select USPS-specific health care plans. It will take onerous payments toward health care benefits for future retirees off the agency’s balance sheets, a provision that has long held bipartisan support since shortly after Congress required them in its 2006 law. While USPS has for years defaulted on the payments, postal management and a wide variety of stakeholders have said they place an undue burden on the agency that no other government entity takes on and have flooded it with debt. 

Postmaster General Louis DeJoy has endorsed the bill and said its core components were essential to eliminating projected losses over the next decade as part of his 10-year business plan. He has spent time on Capitol Hill over the last two months helping to lobby support for the measure. 

"With the legislative financial reforms achieved today, combined with our own self-led operational reforms, we will be able to self-fund our operations and continue to deliver to 161 million addresses six days per-week for many decades to come,“ DeJoy said after the bill passed the Senate.

The bill won unanimous support at the committee level last year, but languished for months until a renewed push led to the measure easily clearing the House in February. A breakthrough occurred in part because a Congressional Budget Office score last month that found the measure would save the government $1.5 billion over the next 10 years. Lawmakers and postal management have estimated it will save USPS $50 billion over the same period.

The measure will allow USPS to provide non-postal services, including for state governments and other federal agencies. It also includes a six-day delivery mandate, which DeJoy has already said he plans to maintain. Postal management will face a new requirement to update the White House, Congress and its regulator every six months on its financial state, volume, implementation of changes, investments into its network and performance. It will also have to create new annual performance targets with a public website for tracking results.

While a majority of Republicans supported the measure, Democrats won their support only after significant negotiation. The minority party only offered its endorsement on the House side after successfully fighting to remove a provision Democrats had originally included to restrict USPS from altering its service standards. DeJoy is in the midst of implementing his business plan, which has included slowing down delivery for some mail. In 2020, Congress on a bipartisan basis approved a $10 billion grant to USPS to offset some of its pandemic-related losses.

When the House originally sent the bill to the Senate last month, it passed along the wrong version that did not include the most up-to-date text. Senate Majority Leader Chuck Schumer, D-N.Y., quickly took action to sidestep the error and vote on the correct version, but Sen. Rick Scott, R-Fla., objected, sending the process into chaos. Senators left Washington later that week for a planned recess, and only this week resumed movement on the bill. Scott said on the floor he was concerned the measure had not gone through the committee process on the Senate side and about the funding for a potential increase in Medicare costs.

Bipartisan support has not stopped previous postal reform efforts from repeatedly fizzling out over the last decade, including a 2012 measure that cleared the Senate. Advocates for the current legislation, however, had optimistically noted the bill has support of both parties, postal leadership, the White House, large mailers and postal unions. Some mailers, however, voiced concerns late in the process that a provision to require USPS to deliver mail and packages through an “integrated network” could lead to unintended consequences for the postal system. 

The bill’s passage faced further delays after Senate leadership was forced to negotiate over which amendments to allow on the bill. Schumer and Republicans spent days ironing out whether to allow amendments or which would receive votes, with proposals ranging from forcing USPS to further study electric vehicle adoption to banning the agency from offering financial services. Ultimately, the Senate did not approve any changes to the House bill. 

Democrats have been much less vocal in their criticisms of DeJoy in recent months and, through his appointments to the Postal Service’s Board of Governors, President Biden has indicated he will not seek to oust the postmaster general. DeJoy briefly drew the ire of Republicans, who had allied with him and fully endorsed his 10-year reform plan, by launching a limited pilot program for financial services. While they collaborated to deliver 500 million at-home COVID-19 test kits to Americans across the country, the Biden administration and USPS have clashed recently over DeJoy’s plans to replace nearly the entire postal fleet with non-electric vehicles.

This story has been updated with comment from the Postal Service.