Deliverance for the Postal Service
Sometimes government does a useful thing for a bad reason. That’s a rough summary of the Dec. 4 report just issued by the Trump administration’s Task Force on the United States Postal System. The origins of the report lie in President Donald Trump’s Twitter attacks on Amazon last spring, for purportedly using the U.S. Postal Service as its “delivery boy,” a “scam” that supposedly cost the cash-strapped USPS “billions.” (Amazon’s founder and chief executive, Jeff Bezos, owns The Post.) These outbursts then mutated into Trump’s order creating the task force to evaluate the Postal Service’s finances and operations, and make policy recommendations.
The ultimate product is 74 pages whose fully justified premise is that the Postal Service faces an irreversible decline in its most lucrative line of business – first-class mail – and will be unsustainable without fundamental reform. The system’s operating revenue and expenses have basically matched since 2013, but it is not breaking even after accounting for billions of dol- lars in legally mandated retiree health benefit contributions that it has skipped since 2011 due to a lack of cash. And it won’t break even over the longterm without new pricing flexibility and lower costs for labor, which account for 76 percent of the system’s expenses.
On the fraught question of package charges to Amazon and other e-commerce businesses, the report supports neither the president’s extravagant criticism nor the notion that there is no room for improvement. It notes that packages make up a growing and profitable part of the Postal Service’s business, without which its plight would be even worse. However, there could be opportunities to make even more revenue from package delivery if USPS maximized profitability rather than volume, the report notes. The Package Coalition, of which Amazon is a leading member, warned that “by raising prices ... the Postal Task Force’s package delivery recommendations would harm consumers,” but there might be room for compromise here, especially since the report said USPS “should not single out individual commercial customers for disparate treatment” and endorsed a continued government-backed Postal Service role in commercial package delivery, at least for the short term.
Actually, package pricing is a side issue compared with the Postal Service’s far more urgent problem: the displacement of the first-class letter business by electronic communications. And on that point, the report had a number of good suggestions, the common feature of which was that USPS needs to be allowed to charge mailers of all kinds rates based much more on economic reality, rather than subject to price caps, as at present. Creatively, the report proposed charging some shippers to deliver to mailboxes, to which the Postal Service enjoys exclusive legal access, rather than requiring them to use USPS personnel. And, wisely, it suggested restructuring, but not eliminating, the retiree health pre-funding obligation.
In short, the Trump task force’s diagnoses and prescriptions resemble those in many previous such documents. Well aware of the system’s issues, Congress could, and should, have acted on earlier reform proposals long ago. When will the delay finally end?