A healthy U.S. Postal Service (USPS) is in everyone’s interests, especially those of us who depend on it for our organizations and businesses. But enabling inefficient operations with unwarranted rate increases causes more harm than good.
That is why we strongly urge the Postal Regulatory Commission (PRC) to keep the pricing system that limits postage increases for the USPS’s captive mailers to the rate of inflation. This system is the only real protection that mailers have from abuse of the Postal Service’s monopoly power.
For years, we have seen grim predictions from USPS warning of its pending financial demise. What we haven’t seen, however, is a clear and accurate picture of its financial outlook—or any evidence of sustained cost control and modernization efforts across its vast enterprise. In fact, the USPS is in much better financial health than it says publicly, and above-inflation postage increases are unnecessary.
The PRC is currently reviewing the postal pricing system, a task required by the 2006 Postal Accountability and Enhancement Act (“PAEA”), to see how the Postal Service is doing in terms of meeting the law’s objectives.
Those objectives include: ensuring adequate revenue to maintain financial stability, maintaining just and reasonable rates, and maximizing incentives to reduce costs and increase efficiency. The USPS is asking the PRC to scrap the law’s inflation-capped pricing system and give the USPS unchecked power to set its own rates, with little or no oversight by the PRC. There is no justification for this money grab. The USPS has a monopoly over many classes of mail, and exclusive use of the nation’s mailboxes, and its monopoly pricing power still requires regulatory oversight.
In the formal comments we recently submitted to the PRC, we show that the USPS is actually in good financial shape. It has approximately $8 billion of cash on hand and generated nearly $3 billion of cash from operations each year from FY2014 to FY 2016. It has also pre-funded its major liabilities much more than federal and state governments and most private employers; USPS has $340 billion in its pension and retiree health care accounts, enough to pay benefits for decades.
If the USPS is genuinely dissatisfied with its finances, it has many ways to improve them by operating more efficiently, including rethinking operational decisions, reinvigorating stalled cost reduction efforts, leveraging their vast real estate holdings, reducing compensation premiums (the USPS pays its workers about twice what the private sector pays for similar work), and earning a better return on its very large investment portfolio.
In the absence of a real commitment by USPS to modernizing and finding cost savings, the Commission would be sending the wrong message by making changes to the pricing system right now. Giving the USPS unchecked monopoly pricing power would also cause great financial harm to those of us who need the USPS to deliver personal and business correspondence, nonprofit fundraising letters, magazines and newspapers, and other types of mail that millions of Americans depend on. We trust the Commission will agree when it issues its determination later this year that we cannot destroy the crucial protections the current pricing system provides to users of the nation’s postal system, because gutting those protections is not necessary and not warranted.
Linda Thomas Brooks is president and CEO of MPA- The Association of Magazine Media, Stephen Kearney is executive director of Alliance of Nonprofit Mailers and Michael Plunkett is president and CEO of Association for Postal Commerce.
The views expressed by this author are their own and are not the views of The Hill.