On Tuesday, the US President Donald Trump blamed internet companies that comprise Amazon.com, Inc. (NASDAQ:AMZN) for the decline of USPS during a coronavirus taskforce briefing.
Trump signs CARES Act into law
Trump has signed CARES (Coronavirus Aid, Relief and Economic Security) Act into law on March 27, 2020. When a reporter asked Trump about comments from Gerry Connolly, D-Va, the rep, suggesting that the president requested $25 billion for USPS be deducted from CARES. He said it is the new one. Internet companies dump everything on USPS and ask them to deliver. If the USPS raises the prices, it could be a break-even or make money. But, it is not doing that. Trump intends to find the reason.
USPS earns higher revenues from the shipping of packages
USPS is earning higher revenues from shipping packages. However, its revenues are declining from marketing mail and first-class mail. The company has reported a loss of $8.8 billion in 2019.
One of the reasons for the decline of USPS is pre-fund health benefits for the workers. According to 2019, annual report, other worker-related expenses that comprise workers’ compensation also causes the decline of USPS.
USPS in severe financial crisis
USPS is facing a severe financial crisis because of the outbreak of coronavirus. It could run out of money by June 2020. Two Democratic lawmakers, who are overseeing the USPS, said it needs help from the White House and the Congress. Otherwise, it could not survive this summer. The recently signed stimulus package allows USPS to borrow $10 billion from the treasury.
Americans depend on post offices for medical supplies Several Americans depends on post offices for medicines and services. The rural population in the US mostly uses USPS for their medical needs. Lack of funding to the USPS could hamper the upcoming 2020 and ongoing elections. The semi-independent government agency is not running on taxpayer funds. Also, advancing of pension and other expenses are causing a huge burden to the USPS. Moreover, it has an outstanding debt of $11 billion. Further, the USPS employees are working in hazardous conditions because of the COVID-19 pandemic with little or no PPEs.