CAGW Fights Postal Rate Increase
May 17, 2005
by: Leslie Paige

Wastewatcher, 5-May

Citizens Against Government Waste joined a large group of taxpayer and consumer groups in signing a letter to Jim Miller, chairman of the United States Postal Service’s (USPS) Board of Governors, outlining six essential elements of meaningful postal reform.  The USPS filed for a rate increase on April 8, 2005, seeking an across-the-board 5.4 percent increase in all categories of mail.  In addition, Congress is considering a legislative package to implement postal reforms.   

The signatories to the letter, including representatives from the National Taxpayers Union, The Lexington Institute, Consumer Action, PostalWatch, Americans for Tax Reform, and the Consumer Postal Council, believe that any effective reform of the USPS must address fundamental issues related to accountability, financial transparency, and proper cost attribution within the postal agency.  The group also expressed grave concern that the USPS will seek to solve its chronic financial problems by expanding into non-postal businesses, competing unfairly with private sector firms.  The letter also endorsed a 2003 recommendation by the Presidential Commission on the United States Postal Service to adopt the Pentagon’s successful practice of using an independent commission to close unneeded postal facilities to cut operating costs. 

Miller, a former Director of the Office of Management and Budget under President Ronald Reagan and chairman of the U.S. Federal Trade Commission from 1981 to 1985, was confirmed to the USPS Board of Governors in November of 2004.  Under Miller’s leadership, the USPS Board of Governors appears to be actively seeking input on how to remedy some of the USPS’ most intractable long-term problems, including stagnating or deteriorating mail volume, crushing labor costs, tens of billions of dollars in future unfunded liabilities for USPS retirees, and a rapidly changing global communications infrastructure. 

Taxpayer and consumer groups are wary of calls by many in the postal community, including the Postal Board of Governors, for more pricing flexibility for postal management.  The USPS has a government monopoly over first class mail delivery.  Without the stringent demands of true market competition, the USPS could conceivably raise rates even faster without ever accounting for its real costs.  In addition, postal management would not have the necessary incentives to drive waste and bloat out of its operations, boost productivity, or make the USPS a more efficient operation.