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Government Spending

USPS Has Received Over $45 Billion from Taxpayers to Reduce the Cost of Junk Mail, Killing Billions of Trees

100 million trees and $178 billion worth of time could be saved every year by not subsidizing junk mail

As of 2020, the cost to you for a stamp is $0.55. Junk mailers enjoy a 65% discount as the USPS bulk mail rate given to them is only $0.19.

Junk Mail

The United States Postal Service fulfills a very important mission. Everyone benefits from it and all postal workers deserve our thanks.

Billions from the US Treasury Used to Artificially Lower Prices

$3 Billion in Annual Deficits

Over the last 50 years, the USPS has charged around $3 billion less each year than it cost to deliver the mail. To provide these artificially lower prices to junk mailers, it’s had to borrow around $3 billion each year from taxpayers.

Source USPS

$45 Billion in Accumulated Debt

Some of this debt was repaid with surpluses in the 1990s, but for the most part, these deficits have accumulated to over $45 billion.

Source USPS

$143 Billion in Debt & Unfunded Liabilities

USPS’s total unfunded liabilities and debt were $143 billion at the end of the fiscal year 2018, an amount double its annual revenue.

United States Government Accountability Office

Much of the inevitable upcoming addition debt is from a demographic spike in retirees and their promised benefits.

USPS Efforts to Transfer Over $100 Billion in Liabilities to Taxpayers

Declining revenues in the amount of physical mail sent and increased pension payouts make it nearly impossible that this debt to taxpayers will be repaid. As a result, efforts are underway to completely transfer this $100 billion in retirement costs to the backs of taxpayers.

USPS has sought legislation that would integrate its retiree
health program with Medicare, which would significantly reduce its total
unfunded liabilities.

United States Government Accountability Office

Congressional Efforts to Transfer USPS Debt to Taxpayers and Increase Borrowing

The House’s $2.5 trillion coronavirus relief package would send $25 billion to the Postal Service in emergency funding and eliminate the Postal Service’s $11 billion debt. The measure would reset the Postal Service’s borrowing limit to $15 billion and eliminate an annual $3 billion borrowing cap. 

Politico

This effort at complete forgiveness of debt failed to survive through the passage. Instead, it included an additional (likely unrepayable) $10 billion loan for the Postal Service.

However, Representative Connolly stated that there will be continued effort to transfer the debt to taxpayers. “It needs debt forgiveness, not debt extension,” Connolly told NPR.

It’s Illegal For a Private Service to Deliver Mail More Cheaply Than the USPS

The United States Postal Service (USPS) enjoys a complex series of financial subsidies and tax advantages over private delivery services such as FedEx and UPS. Indeed it has been made illegal for a private company to deliver a letter to your mailbox at a rate lower than the USPS.

Hence, they enjoy many economies of scale benefits that come with being a monopoly. Despite this, it still runs a $4.2 billion-per-year deficit that has to be covered by the taxpayer via the US Treasury.

These benefits not enjoyed by its private counterparts include:

  • direct subsidies and congressional appropriations
  • US Treasury-provided borrowing subsidies and loan forgiveness
  • $1.0 billion in broad tax exemptions
  • $3.12 billion in the economy of scale advantages derived from its monopoly on delivering letters

The added cost of maintaining this monopoly equates to an $18 billion gift to the post office every year. There are 143 million taxpayers in the US. This means your annual USPS bill comes out to $126.

Mo’ Money, Mo’ Junk Mail

As of 2020, the cost to you for a stamp is $0.55. Junk mailers enjoy a 65% discount as the USPS bulk mail rate given to them is only $0.19.

In order for a bulk mail campaign to be worth doing, the bulk mailer has to make more money than it costs to send. Otherwise, they couldn’t afford to keep sending it. So there are a small number of suckers who pursue these offers they receive and the profit from them exceeds the $0.19/letter threshold. If direct mailers had to pay $0.55 per letter, the profit from the majority of junk mail campaigns would no longer exceed the cost of mailing threshold. Hence, you would get a lot less junk mail.

Eliminating this discount for bulk mailers could save:

2.5 Billion Hours are Wasted Sorting Junk Mail Every Year

The average American spends about 2 minutes per day, 6 days per week sorting through junk mail. There are 159 million mailboxes in the US. This is 1 mailbox for every 2 people since people in households share a mailbox.

2 minutes x 6 days x 52 weeks x 159 million mailboxes = 1.6 billion hours wasted sorting junk mail in the US every year.

The average hourly rate of pay in the US is $24.

1.6 billion hours x $24/hour = $40 billion worth of time wasted by junk mail each year.

Fun Facts About Junk Mail

Environmental Effects of Junk Mail

  • 5.6 million tons of catalogs and other direct mail advertisements end up in U.S. landfills annually.
  • 44 percent of junk mail is thrown away unopened, but only half that much junk mail is recycled.
  • The average American household receives 848 pieces of junk mail, which equals 1.5 trees every year and more than 100 million trees for all U.S. households combined. That’s the equivalent of deforesting all of Rocky Mountain National Park every four months.
  • Largely due to deforestation, junk mail manufacturing creates as much greenhouse gas emissions annually as 3.7 million cars.

Calculations

The calculations for this post are available in a spreadsheet at https://docs.google.com/spreadsheets/d/1NxtJZHDUywmmSy9lJn0iX66YoukV_1-cDQet9sSwdUg/edit?usp=sharing. Feel free to make a copy, correct any errors, and email [email protected] and I will update the post accordingly.