A pair of television ads from Democrats blaming Republican Sen. Susan Collins for the U.S. Postal Service’s ongoing challenges oversimplifies the agency’s complicated financial situation while leaving out key context on bipartisan efforts at postal reform.
But the ads correctly highlight the generous contributions Collins has received from private companies involved in the shipping industry.
With Collins facing the toughest fight of her 24-year Senate career, national political action committees are pouring tens of millions of dollars into Maine to prop up or knock down the incumbent or her Democratic challenger, Sara Gideon.
One of the biggest outside players is the Senate Majority PAC, a so-called super PAC affiliated with Senate Minority Leader Chuck Schumer, D-New York, that has spent more than $6 million against Collins to date, according to campaign finance reports.
Senate Majority PAC’s most recent television ad opens by stating that “big problems at the post office here started here” while showing the placard outside Collins’ D.C. office. The ad then states that “legislation from Susan Collins crippled the postal service’s finances and wracked up $160 billion in debt.”
A second ad from the Duty and Honor PAC affiliated with the Senate Majority PAC levies the same attack, albeit worded differently.
“It was Susan Collins who wrote the legislation that put the Postal Service more than $160 billion in debt, forcing cuts in services, staff, equipment,” states the narrator in the Duty and Honor ad.
As with most negative campaign ads, the attacks are based partly on truth but conveniently leave out a huge amount of context and background. The ads then attempt to lure viewers into connecting recent reported delays in mail delivery with decade-old changes that Collins helped bring about.
POSTAL DEBT
In 2006, Collins was the lead sponsor of the Senate version of the last major postal reform bill. The final measure passed unanimously in the Senate and was even co-sponsored by Schumer and 15 other Democrats (which the ads fail to mention.)
At the time, much of the attention was on linking postage rates to inflation in order to provide more price predictability to average customers and, perhaps more importantly, to businesses that rely on mail and package shipping.
Yet the Postal Accountability and Enhancement Act also made highly consequential changes to the way the U.S. Postal Service pays for its retirees’ pensions and health benefits.
Under the bill, the Postal Service was required to “prefund” future retiree benefits rather than “pay-as-you-go” like every other government agency and private company. That prefunding requirement wasn’t included in the original versions of Collins’ bill or its House counterpart, but was added at the insistence of the Bush White House to avoid saddling taxpayers with future bills for postal service retirement benefits.
The prefunding price tag was more than $5 billion annually over 10 years. And the agency made those payments for the first few years because times were good at the post office.
But then first-class mail volumes plummeted (falling 44 percent since 2006) as the Great Recession reduced demand and consumers switched to their smart phones and computers for emailing, messaging, paying bills, etc.
The Postal Service hasn’t made a payment in a decade, opting instead to maintain its cash flow in order to “be able to continue to fulfill our primary universal service mission.” But because those non-payments show up as debts on the Postal Service’s financial reports, the Postal Service ended Fiscal Year 2019 with $161 billion in unfunded liabilities and debts – as the ads correctly state – even if those are only on paper.
A ROOT CAUSE?
So are those debts and liabilities the cause of the Postal Service’s current financial crisis? It depends on who you ask.
“I think it was a mistake to include that in the (2006) bill but it really hasn’t had a material impact – it’s not the main problem,” said Stephen Kearney, executive director of the nonpartisan Alliance of Nonprofit Mailers and a former Postal Service executive.
Kearney pointed out that the Postal Service hasn’t been making those payments for years, so it’s not as if the prefunding is still siphoning money directly from other programs. The “main problem,” he said, dates back to the 1970s when Congress decided the Postal Service should be self-sufficient and not receive any federal appropriations.
While some aspects of the service are profitable even today, the decline in first-class mail and rising costs elsewhere mean the agency lost nearly $9 billion last year.
“It’s not there to make profits from an accounting sense,” Kearney said. “It is there to provide a service to the American people.”
Not everyone believes the prefunding mandate is entirely blameless for the agency’s financial plight, however.
Back in 2015, the U.S. Postal Service’s Office of Inspector General – the quasi-independent office responsible for audits and investigations – noted that the service’s pension and health care accounts were in much better positions than similar federal accounts.
“But getting to this well-funded position has been painful,” the office wrote in a blog post accompanying a report. “The Postal Service’s $15 billion debt is a direct result of the mandate that it must pay about $5.6 billion a year for 10 years to prefund the retiree healthcare plan. This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development.”
This year, as the COVID-19 pandemic further disrupted postal operations, the agency received a $10 billion loan from the U.S. Treasury to allow it to pay its operational bills through next year.
In addition, the unions that represent most postal workers have repeatedly called on Congress to eliminate what they view as an unnecessary and harmful mandate. That would “save” the Postal Service up to $4.4 billion annually, reads a 2018 recommendation to the White House from the National Association of Letter Carriers, the American Postal Workers Union, the National Rural Letter Carriers Association and the National Postal Mail Handlers Union.
But again, that $4.4 billion in annual “savings” is largely on paper because no payments are being made.
“It caused the Postal Service to exhaust its credit limit, starved the agency of needed investment, and led to self-defeating service cuts – all the while overshadowing the agency’s operating profits for three of the past four years,” reads the 2018 recommendation to the White House Task Force on the Postal Service.
Collins’ campaign accused the two PACs of launching “false attack ads” and called her a “champion for the Postal Service.”
Debate continues about how to address the Postal Service’s operating deficit as well its unfunded retirement liabilities. Doing so would take major reforms that would have to be approved by an increasingly partisan and paralyzed Congress, however.
FUNDRAISING
The Senate Majority PAC ad also alleged that Collins’ campaign coffers benefited from the 2006 reforms because they enhanced the profitability of private companies such as FedEx and UPS. And the ad pointed to $200,000 in contributions from private shipping and mailing companies.
It’s not always possible to draw a straight line between donations to candidates and their advocacy on issues, although Collins’ long-standing involvement on postal issues likely helps with fundraising from the shipping sector.
The $200,000 figure in the ad is accurate, although it includes more than just private companies. Also, not all of that money flowed directly into Collins’ re-election campaigns.
Federal Election Commission filings show that between 2004 and 2020, PACs affiliated with FedEx, UPS, Pitney Bowes and the Printing Industries of America contributed more than $192,000 to Collins’ campaign or her Dirigo PAC, which supports other Republican candidates.
The United Postmasters and Managers of America and the Association of United States Postal Lessors contributed another $10,500 to Collins or her Dirigo PAC.
Collins has also received more money this election cycle from FedEx’s corporate PAC or its employees (roughly $23,000) than any other congressional candidate. During her last election in 2014, the $19,400 Collins received from the PAC or FedEx employees placed her third among congressional candidates, according to totals compiled by the campaign finance watchdog group the Center for Responsive Politics.
But Collins isn’t the only Maine candidate to receive support from such groups and companies.
Since 2006, FedEx’s corporate PAC has donated more than $217,000 to political candidates and fundraising committees in Maine, both at the congressional and state level, according to FEC data.
While Collins has received more from the UPS corporate PAC than any other Maine politician ($22,500 since 2006), the organization has also spread its money around in Maine. Past recipients of UPS money are: independent Sen. Angus King ($8,000), former Republican Sen. Olympia Snowe ($5,500), Democratic U.S. Rep. Chellie Pingree ($3,000), former Republican U.S. Rep. Bruce Poliquin ($18,000) and former Democratic U.S. Rep. Mike Michaud ($11,000).