29 Jun 2021 To Succeed, the U.S. Postal Service Should Emulate Ben Franklin
With all of the political division in Congress, it’s a pleasant surprise that one of the few areas of bipartisan support comes in the form of a plan to revamp the United States Postal Service (USPS) to make it more efficient and self-sufficient.
While some want to shutter the USPS, others seek to transform it into a 24/7 one-stop-shop for email, printing, and banking. Neither solution is in keeping with our founders’ intentions regarding the postal service and certainly nothing like that modeled by our first Postmaster General, Benjamin Franklin.
The good news is that over the last year our present Postmaster General Louis DeJoy has developed a 10-year strategic plan for the Postal Service – one that will ensure it is a self-sustaining, user financed operation. Selected by the Postal Service Board of Governors in 2020, DeJoy was chosen as the leader who would ensure the Postal Service’s important role continues, and who would strengthen the agency so that it can operate for future generations. His plan would make Benjamin Franklin proud.
A bill introduced by Sens. Rob Portman (R-OH) and Gary Peters (D-MI) would build on DeJoy’s plan. Their proposal has four main provisions.
It codifies longstanding postal policy and practice by formally requiring the Postal Service to deliver mail and packages together at least six days a week. As mail delivery shrank over the past 15 years package delivery increased. Postal Service package deliveries have been a lifeline during the pandemic, from seniors receiving their medications, to small businesses struggling to reach customers, and to individuals throughout the country purchasing essential supplies and consumer goods. That is especially true for rural areas which private carriers either don’t service or impose surcharges.
In 2006, Congress was concerned that the Postal Service might use funds from mail delivery to subsidize the competitive package delivery business. But in fact, the opposite occurred. Package deliveries have helped to keep the Postal Service afloat returning a net $11 billion to the Postal Service’s bottom line over and above the cost of providing package delivery services. Postmaster General DeJoy is a logistics man, and he knows maintaining the efficiencies of an integrated delivery network for mail and packages is essential to the Postal Service’s future.
The bill also requires the independent Postal Rate Commission to review its regulations regarding the pricing of package delivery to determine appropriate cost attribution. Under existing law, the Postal Service charges its direct cost for package delivery, plus an appropriate share for overhead. This 2006 law was written to ensure that the Postal Service competed fairly in the private market with companies like UPS and FedEx. Under the proposal, the Postal Rate Commission will yet again review how costs are attributed to mail and packages to ensure mail delivery isn’t inadvertently subsidizing package delivery. Notably, however, the bill correctly avoids setting any arbitrary mandated price floor for package deliveries.
Additionally, it bars the Postal Service from hosting email, printing and copying services, banking, and other non-postal commercial services. While most of us weren’t paying attention, progressives urged the postal rate commission to offer payday lending and a host of other so-called “commercial services.” That despite a key provision of the 2006 Postal Accountability and Enhancement Act limiting the Postal Service from expanding into non-postal business. Expanding into the financial arena is an especially terrible idea and would serve only to put taxpayers at risk. Fortunately, the Senate bill would reinforce the earlier decision to keep the Postal Service focused on the mail and package delivery business.
Finally, it also ends the burdensome requirement that the Postal Service “pre-fund retiree health obligations” – a requirement not imposed on any other federal agency or private companies. Retiree health benefits for USPS employees are treated like pensions at present, meaning the USPS is obligated to set aside resources to provide and fund the benefit for future retirees even as health care costs explode. Fortunately, the bill ensures that while existing retirees continue being covered, new retirees will use Medicare (which they paid for during their working careers) like the rest of the American population, allowing the Postal Service to redirect its resources elsewhere.
Absent this legislative relief and the action, the USPS says it will lose $160 billion over the next 10 years — an occurrence that would eventually require a major taxpayer-funded bail-out.
Since 2006, when former President George W. Bush signed the previous postal reform law, mail volumes have declined but package delivery has exploded. We should build on that development and let the Postal Service move to real profitability by doing what it does best – delivering mail and packages.
Benjamin Franklin used his knowledge of the operations of the British postal system to establish a standard rate for mail and newspaper delivery, making the American postal system both profitable and efficient. That’s a model that we should emulate.
The Portman-Peters bill will go a long way toward that goal.
New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21, other Project 21 members, or the National Center for Public Policy Research, its board or staff.