Alex Washburn / AP file photo

Trump Proposes $97 Billion USPS Savings Package, Including Pay and Service Cuts

Plan would "restore solvency" to the cash-strapped agency, White House says.

The Trump administration is proposing a slew of changes to the U.S. Postal Service’s operations and workforce compensation in an effort it says will save $97 billion and put the financially strapped agency back on a stable path. 

The White House included in its fiscal 2021 budget proposal all of the recommendations made by a task force President Trump created in 2018 to put USPS on a better course, saying the reforms would save the mailing agency from an existential threat. Absent changes, the administration estimated the agency would lose $7 billion this year and $8 billion per year through 2030. 

As part of the reforms, the administration said, the Postal Service should offer employees lower pay that would put them more in line with other federal employees. The plan also assumed the less generous retirement and health care benefits it proposed for the rest of the federal workforce would also apply to USPS employees. 

The Postal Service should have a more flexible rate-setting system, the administration said, enabling it to raise prices significantly on most packages and other services it considers “non-essential.” It should also change its standards to enable less frequent mail delivery and allow the private sector to conduct some mail sorting. The White House plan would give outside entities access to mailboxes and provide new revenue streams at post offices. 

USPS would also be able to remove the payments toward health benefits for future retirees that it defaulted on from its balance sheet by reamortizing those liabilities over a 40-year period. The House last week voted to eliminate that prefunding requirement entirely.  

Absent from the budget blueprint was a plan to sell off the Postal Service to the private sector, which the administration previously pitched in its government reorganization strategy. Asked on Monday if the administration is still pushing that goal, Office of Management and Budget Deputy Director for Management Margaret Weichert said, “Our thinking has evolved over the last 18 months.” 

Many of the Trump administration task force’s proposals were roundly rejected by stakeholders, lawmakers on both sides of the aisle and members of USPS leadership. The Postal Service has repeatedly called on Congress to alleviate some of its legislative burdens, but Congress has yet to take any action despite widespread agreement on many of the key tenants of what such a reform bill should look like. 

The White House said its plan would stabilize the mailing agency and save nearly $100 billion over the next 11 years, though it estimated USPS would shed nearly 7,000 employees in fiscal 2021.   

“This proposal will restore solvency to the Postal Service and ensure that commitments to current and former employees are funded from business revenues rather than taxpayers,” the administration wrote.