Postal Reform Page: 3 of 15
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Although its short-term financial prospects
have suddenly brightened by discovery that
retirement obligations are less burdensome
than presumed, the U.S. Postal Service
(USPS) faces severe financial straits in the
long term. Business use of the mails is declin-
ing as alternatives such as e-mail, faxes, and
cell phones substitute for hard copy letters.
The economic slowdown that began in 2001
has cut into advertising mail. On top of this,
the anthrax attack of October, 2001 has af-
fected volume and added billions in costs for
mail sanitization. Despite three rate increases
in 18 months, USPS has lost well over $2
billion in the past two years, and owes $11.9
billion to the Treasury. It has a negative net
worth and mounting obligations for retiree
health benefits. USPS would be bankrupt but
for the fact that it is a government entity.
USPS, its board of governors, GAO, and
most mailers' organizations believe that the
Postal Reorganization Act of 1970 no longer
provides a viable business model. It is de-
pendent on rising mail volume to cover the
ever-increasing cost of arbitrated labor settle-
ments and the addition of 1.7 million new
delivery points each year, yet volume has
begun to fall. The highly regulated process of
setting rates is cumbersome and tendentious.
At congressional request, USPS devel-
oped a "Transformation Plan" that briefly
considered, and rejected, the alternatives of
privatization and a return to regular agency
status with appropriations to cover the costs of
universal service. Instead, it asks Congress
for authority to change rates more flexibly,
close post offices and processing centers, and
negotiate tailored service agreements and
volume discounts for big mailers. It also
proposed to redefine its universal service
obligation by adjusting the number of delivery
days, and to revamp union contract talks by
involving the President and Congress in avert-
Most postal stakeholders think that the
USPS monopoly lines - first class, periodical,
and advertising mail - are a declining busi-
ness, and want USPS to compete in other
markets that are growing. Competitors in
those markets resist because USPS pays no
taxes and is immune from most government
regulations. They think USPS should concen-
trate on its natural monopoly - the "last mile"
in the delivery process. USPS has had little
success to date in developing commercially
Congress has not shown much willing-
ness to address postal reform. While a reform
bill has been under development in the House
for a half-dozen years, it has yet to emerge
from committee. Legislative attention in the
108th Congress has focused on relieving USPS
of its statutory schedule of payments to the
Civil Service Retirement Fund. The current
contribution rate will overfund the USPS
obligation by $71 billion to $103 billion. H.R.
735 in the House, and S. 380 in the Senate
would allow USPS to reduce its retirement
On December 11, President Bush ap-
pointed a presidential commission, with nine
members who have no previous ties to postal
issues, to review the role of the Postal Service
in the 21St century. This was welcomed by
many observers who had felt that Congress
was immobilized by conflicting pressures.
The commission is to report by July 31, 2003.
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Postal Reform, report, February 25, 2003; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc806221/m1/3/: accessed November 18, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.