Six major reasons the Postal Service Reform Act is insufficient
“This is not sufficient reform.”
With those words, Rep. Darrell Issa (R-Calif.), who for years introduced legislation and pushed for major reforms at the U.S. Postal Service, nailed it on the Postal Service Reform Act. Issa announced he could not support the bill even though it had many positive provisions, because the omissions were so grave. Unfortunately, the U.S. House of Representatives passed it anyway on Feb. 8.
By contrast, Rep. Carolyn Maloney (D-N.Y.), a co-sponsor of the legislation who chairs the Oversight and Reform Committee that first cleared the measure, tweeted “My Postal Service Reform Act will save #USPS from financial ruin and will preserve and strengthen the vital institution for generations to come!”
The “saving from financial ruin claim” is far from certain. What is clear is the narrowly tailored legislation will not improve mail service, which is now slower than in the 1970s. Other omissions include not defining the mission or Universal Service Obligation of the U.S. Postal Service (USPS) and not significantly strengthening its regulator so USPS’s often audacious practices can be held in check.
The Postal Service Reform Act (PSRA) principally addresses USPS’s retiree health benefit costs. USPS has long provided a financially attractive retiree health benefits plan, so good that many of its employees did not want to enroll in Medicare.
With PSRA, future retirees will be required to enroll in Medicare. Many current postal workers will take a significant financial hit. And with Medicare facing enormous financial pressures, program cutbacks may be inevitable, compounding the impact.
What is unresolved is the following.
Quality of mail service. Mail service today is slower than it has been since the 1970s. Starting October 1, 2021, USPS intentionally slowed delivery by at least a day for 40 percent of first-class mail, its most profitable and important service, to the American people. This is USPS’s second service reduction in seven years.
Ensuring USPS will be self-supporting. By law, USPS is supposed to be self-supporting, obtaining its revenue from those who use purchase services. But Congress has usurped this in recent years, providing $10 billion in COVID funding, and some want to do this again by providing it with $7 billion to purchase electric vehicles. The shippers of large volumes of packages, that is large retailers, should be hit with any assessment for electric vehicles, not the American people. Letters are more compact and easier to deliver than packages. In fact, packages at USPS take up nearly seven times as much vehicle space as letters.
Defining USPS’s mission statement. The central mission of the U.S. Postal Service has always been to deliver mail, which only it can do in timely, reliable manner throughout the 50 states. That mission should be reiterated by Congress.
Determining costs. USPS needs to do a much better job of understanding its costs, which its Office of Inspector General has urged, so that it can price its services accordingly. Large retail package shipping interests, though, are attempting to muddy the waters on this issue through Section 202 of the bill which requires USPS have an integrated delivery network for mail and packages, which it has had for a long time.
The provision, which is at best a solution in search of a problem, should be removed. Relatedly, Congress should require that USPS understand the costs of every product as other organizations do by using widely available data analytics.
Strengthening its regulator. While USPS has annual revenues of approximately $75 billion, the PRC has a budget of merely $20 million per year. The PRC needs to be significantly expanded, at least tripled in size, and given subpoena power to obtain any document from USPS. It should also have the power to stop changes that are harmful to the public interest, such as the reduction in mail service standards that went into effect Oct. 1, 2021.
Addressing defaults. At the end of Fiscal Year 2021, USPS had defaulted on $14.6 billion in retirement obligation payments to the Federal Employees Retirement System and Civil Service Retirement System. With $23 billion in cash, USPS should immediately repay much of these funds and be legally compelled to do so if needed so that workers’ retirements are protected.
The U.S. Postal Service remains important and relevant to America. Addressing the above matters will keep it that way and the U.S. Senate should do so as it considers the legislation.
Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Va.