Postal rates are only part of the sys­tem’s prob­lem

The Enterprise - - Community Forum -

Your Dec. 26 ed­i­to­rial on postal rates was mostly cor­rect, but it was in­com­plete. It is a com­plex sub­ject.

First, in­ter­na­tional postal rates are not the prob­lem that is driv­ing postal fi­nances. They are, in fact, a rel­a­tively small part of the prob­lem. Postal op­er­at­ing rev­enue in 2018 was al­most $71 bil­lion, an in­crease of $1 bil­lion over the pre­vi­ous year.

The fun­da­men­tal prob­lem is a con­gres­sional tax on the postal ser­vice that re­quires the or­ga­ni­za­tion to pre-fund the health care costs of fu­ture em­ploy­ees. No other or­ga­ni­za­tion in the coun­try has this re­quire­ment and it costs the USPS about $5 bil­lion an­nu­ally and re­sults in the net loss re­ported each year. How­ever, any pay­ments the postal ser­vice makes to its ac­count are also cred­ited as rev­enue for the fed­eral gov­ern­ment — which in turn re­duces the fed­eral deficit some­what. Which is why the Repub­li­can Congress did it. It is smoke-and-mir­rors fi­nanc­ing.

The se­cond prob­lem is that the postal ser­vice has been de­pen­dent upon rev­enues from let­ter mail, which have been de­clin­ing for years. The check is no longer in the mail. So the postal ser­vice ramped up its ef­forts to at­tract pack­age busi­ness, and that part of the op­er­a­tion has been very suc­cess­ful.

A ma­jor con­trib­u­tor to this suc­cess was the de­vel­op­ment of ne­go­ti­ated ser­vice agree­ments with or­ga­ni­za­tions such as Fed­eral Ex­press, United Par­cel Ser­vice and, yes, Ama­zon.

These are con­fi­den­tial, not se­cret. Each agree- ment fol­lows very strict rules and is re­viewed in de­tail by the in­de­pen­dent Postal Rate Com­mis­sion. As a re­sult, the postal ser­vice part­ners with these or­ga­ni­za­tions in a way that ben­e­fits cus­tomers, con­sumers, the postal ser­vice and its part­ners. It is a win-win so­lu­tion. The process has been re­viewed by yet an­other in­de­pen­dent or­ga­ni­za­tion, the USPS Of­fice of the In­spec­tor Gen­eral. The re­sults of this au­dit and rec­om­men­da­tions for im­prove­ment are pub­licly avail­able.

The third prob­lem faced by the postal ser­vice is that it is char­tered in the U.S. Con­sti­tu­tion as a pub­lic ser­vice. The def­i­ni­tion of pub­lic ser­vice has changed over time but still in­cludes daily de­liv­ery (in­clud­ing week­end and hol­i­days for pack­ages) to nearly ev­ery ad­dress in Amer­ica, and the main­te­nance of post of­fices in ru­ral Amer­ica that do not cover their costs. Congress has re­sisted ef­forts to cut these costs.

The ad­just­ments in the in­ter­na­tional postal rates, es­pe­cially for pack­ages from what are no longer de­vel­op­ing coun­tries, is a long-stand­ing wish of the postal ser­vice. It was nec­es­sary and it will help the postal ser­vice. But it doesn’t have much to do with dis­agree­ments be­tween Jeff Be­zos and Pres­i­dent Trump. Ama­zon has al­ready de­vel­oped its own de­liv­ery force and is ex­pand­ing to com­pete di­rectly with FedEx, UPS and even the postal ser­vice.

Kent Smith, Wal­dorf

The writer is a re­tired ex­ec­u­tive with the U.S. Postal Ser­vice.

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