Make Banking More Inclusive by Saving the Post Office

April 16, 2020

Why This Matters is a series from Roosevelt staff connecting our individual work—from papers to reports and everything in between—to our broader vision of creating a better, more equitable economic and political system. This series will give readers the top takeaways from our latest writing and thinking, with a focus on why they matter as we redefine the rules that guide our social and economic realities.

Our postal service, like so many institutions during the coronavirus crisis, is suffering. Facing $22 billion in expected new losses over the next 18 months, the USPS announced last week it will “run out of cash” in September without federal assistance. Despite this, President Trump refused a Democratic plan to add a $13 billion grant, plus $11 billion in forgiveness of USPS debt, to the CARES Act, consenting only to a $10 billion line of credit.

That’s a mistake. With the right policies in place, the USPS can not only continue to serve its mission of universal delivery, but can redesign a financial system that has wholly excluded low-income individuals.

Let’s be frank: The USPS needs some major structural changes to prevent significant layoffs and service reductions. Unless something’s done soon, the agency will be looking at significant layoffs, service reductions, and potential privatization.

But as the most popular public good in America, the USPS must be protected from privatization. It supports democracy and commerce by providing affordable mail service to everyone, rich or poor, and as New York Magazine’s Eric Levitz writes, it has created “hundreds of thousands of high-quality, middle-class jobs at a time when such positions were in short supply—while providing a valuable, publicly subsidized service to rural areas in desperate need of federal support.”

A recent tweet from Roosevelt Vice President of Development Juliette Kang Stableski shares the impact a USPS job had on her own family: “My mom worked at USPS for over 30 yrs. Despite her limited English, she had a steady paycheck, good benefits, could change her shifts to manage childcare, and was able to retire 5 yrs ago with a pension. USPS gave our immigrant family economic security. #SaveTheUSPS.”

In the midst of economic collapse due to COVID-19, the USPS can also address another public need: the financial system’s failure to offer banking options for everyone. As Roosevelt Fellow Mehrsa Baradaran explains in a Harvard Review paper, the USPS could offer credit at lower rates than the fringe lenders who typically serve low-income communities. And thanks to its broad infrastructure, the USPS already reaches neighborhoods that have been long deserted by commercial banks. That service could be vital in getting stimulus checks to millions of Americans.

In her just-released Roosevelt paper, “Rethinking Financial Inclusion: Designing an Equitable Financial System with Public Policy,” Baradaran explains that the difficulties of getting CARES Act stimulus checks to the underbanked were not inevitable. Instead, they were the direct result of neoliberal (or free-market) policy design that made financial inclusion an afterthought in policymaking. New policy priorities, Baradaran argues, can help the US financial system work for all Americans.

Baradaran is not alone. Several lawmakers, including House Speaker Nancy Pelosi (D-CA), Sen. Sherrod Brown (D-OH), and Rep. Rashida Tlaib (D-MI), have now proposed that the Federal Reserve directly offer digital accounts to Americans through the post office.

As the world’s most prosperous country—one able to inject trillions of dollars into its economy—the United States must offer an efficient and effective way to put checks into people’s bank accounts. And as the coronavirus crisis sends us into the worst economic downturn since the Great Depression, we cannot let the post office, our favorite public good, fail.