The Postal Service Reform Act Does Not Deliver

By Rachel Cole

WasteWatcher, February 2017

It is no secret that the United States Postal Service (USPS) is broke and broken.  The agency’s low standards of delivery are rarely achieved, it has billions in losses and unfunded liabilities, and it has failed to adapt to changing markets.  Reforms are essential, but H.R. 756, the Postal Service Reform Act, falls short of what is needed.

USPS has an estimated $18 billion advantage over the private sector due to its monopoly on first-class and standard mail, a $15 billion line of credit from the Department of the Treasury (which has been maxed out), and exemption from state and local sales, income, and property taxes.  Despite these advantages, USPS has more than $50 billion in losses since 2007 and faces $125 billion in unfunded liabilities.  To make matters worse, H.R. 756 places the burden of USPS’ failures on the taxpayers’ shoulders.

The bill provides, among others things, for the creation of a “Chief Innovation Officer” to provide “non-postal services”; an increase the cost of monopoly products (i.e., stamps); and inconsequential reforms to the USPS Board of Governors.

The core mission of the USPS is mail delivery, but the agency has attempted to dabble in other services in the past, including grocery delivery and financial services.  Allowing USPS to establish more of these non-postal services not only distracts from the problems at hand, but it also allows a government-subsidized service to compete unfairly with the private sector.  Further, increasing the cost of monopoly products will only drive more customers away from its unreliable and costly service.

Since December 8, 2016, the entire USPS Board of Governors, which advises and approves financial decisions, has been vacant.  Before December 8, the board had had only one governor since 2015.  H.R. 756 reduces the number of governors from nine members to five, a hollow reform considering that board membership remains unfilled, and it fails to improve the board’s governance over the agency.

The best solution to USPS’ financial woes is privatization.  Nearly all Western industrialized countries have either partially or entirely privatized their respective postal services, with great success.  Privatizing USPS would level the playing field in mail and package delivery and eliminate the possibility of a taxpayer-funded bailout.  In a September 2, 2001 op-ed, former U.S. Postmaster General William Henderson said, “what the Postal Service needs now is nothing short of privatization.”  Congress should heed his suggestion and re-write H.R. 756 to accomplish that objective.

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