Postage Cuts to Stimulate the Economy, a case for it.

Postage Cuts to Stimulate the Economy

BY BRAD KUGLER AND ERICA SWITZER

March 31, 2020

There have been whispers in the postal, printing and shipping community that one of the best possible stimuli to get the economy rolling fast would be a DEEP postage discount for all mailings and parcels. Think about what a 50% or more cut in the postal and parcel rates would do to the economy!? Some of the hardest-hit industries of marketing, retailers, printing, and mailing would be instantly revived if there were a 120-day slashing of postal rates.

Congress still has authority over the United States Postal Service; however, the USPS receives no tax dollars for operating expenses and relies solely on the sale of postage, products, and services to fund its operations. The USPS was included in The Care Act $2 trillion stimulus package that was signed into law on Friday to the tune of $10 billion. Although the print industry was deemed an “essential business” through the COVID-19 pandemic Stay at Home Order, it remains unclear as to how vast the negative impact is on its overall cash flow and whether or not the USPS cut of the stimulus package will be enough to sustain operations.

In an article released on March 30, 2020, by Fortune, it warns “with a negative net worth of $65 billion and an additional $140 billion in unfunded liabilities, the USPS originally expected to run out of liquidity by 2021 without intervention.” It is thought that the impact of COVID-19, specifically the massive slowdown of market mail, could “hasten the decline of the Postal Service”.

According to iDrive Logistics strategist Matthew White in an interview with Barron’s“National post carriers are declaring force majeure [unforeseeable circumstances that prevent someone from fulfilling a contract], suspending service or otherwise making significant adjustments.” Imagine providing this stimulus where the government really doesn’t have to inject cash.

The post and infrastructure costs remain relatively the same but almost every business is touched in some form or another. Small businesses can be promoting instantly upon re-opening or even prior. Online businesses get a shot in the arm because of the discounted shipping rates. Even the mom and pops who can’t be open can now start delivering or shipping to their customers.

The tens of thousands of printers and agencies are also immediately revived, putting money into the economy without any real infusion by the government. The postage discount would have to be steep and across the board on all services. It would have to be 50-75% for a period of 60-90 days. Then gradually remove the discount over the next 180-240 days on a sliding scale to keep businesses and people using it. As the economy recovers, drop the discount completely and increase if needed post-recovery.

In a nutshell here are the bullet points for such an action.

  • Little to no cash needed from the government to spark the industry.
  • Effects millions of small businesses who cannot afford to advertise or ship their products
  • Instantly revives dead industries like advertising, printing, etc. who rely on print, mail, and the Postal Service to survive.
  • Benefits the consumers who order products as they will get discounts on the products they order (no good mail campaign goes without a call to action).

Unprecedented times call for unprecedented measures. The USPS can negotiate rates for package delivery but Congress has the ability to control postage rates for mail. Printers across the country are “open for business” and ready to produce while following CDC health guidelines. Both essential and non-essential businesses are operational, even though many are working remotely. What an opportunity to incentivize businesses to utilize the power of direct mail – especially while everyone is at home.

Want to be apart of the movement for Postage Cuts to Stimulate the Economy? Contact your elected official: https://www.usa.gov/elected-officials