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The USPS: Privatization or Prioritization?

September 20, 2018
This article was featured in Mailing Systems Technology in September 2018. 

On April 12, President Trump issued an executive order establishing a task force on the United States Postal System. The order directed the task force to evaluate the Postal Service™’s finances and operations and issue a report outlining proposed changes within 120 days.

Many folks in the industry, myself included, were pleased at the notion that a high-level of attention would be focused on the needs of the Postal Service and those of the mailing industry. It was assumed that the task force would look closely at the legislative proposals in both the House and Senate and possibly advance some, if not all, of the changes the bills contained. On another positive note, the order specified that “recommendations shall also consider the views of the USPS® workforce; commercial, non-profit, and residential users of the USPS services; and competitors in the marketplace.”

But on June 21, when the White House’s government restructure proposal was released, it became clear that the task force had been given a specific mandate to make recommendations for reform consistent with the reorganization proposal. In other words, task force members likely went into the effort with the preconceived concept of privatizing the Postal Service.

Restructure the Postal Service
United States Postal Service

Summary of Proposal: This proposal would restructure the United States Postal System to return it to a sustainable business model or prepare it for future conversion from a Government agency into a privately-held corporation. Like many European nations, the United States could privatize its postal operator while maintaining strong regulatory oversight to ensure fair competition and reasonable prices for customers. The President’s Task Force on the United States Postal System will make recommendations on reforms towards this goal in August 2018.

Since the formation of the Task Force, the committee actively sought out industry stakeholders for ideas and viewpoints on solutions to fix the ailing postal system. Many reported out that it was clear the members of the task force were looking for long-term solutions and nothing short term that may just kick-the-can.

I think most would agree that any attempt to privatize the Postal Service would have to be a long-term endeavor primarily due to the universal service obligation and the fact that the USPS handles 47% of the world’s mail.

Hopefully, cooler heads will prevail, and the recommendations of the task force will aim toward the goal of returning the Postal Service to a sustainable business model, rather than preparing it for future conversion from a government agency into a privately-held corporation.

Let’s prioritize!

At the top of my list would be to confirm appointees to the USPS Board of Governors. If the Postal Service were a private sector company, it would rank 37th in the 2017 Fortune 500. How is it possible that an organization of that size and importance can function without a board of directors? Without Governors, it can’t even raise rates by the Consumer Price Index which is well within their legislative purview.

Second, take the best of the two bipartisan bills pending in Congress to have an immediate effect on the balance sheet. Both S.2629 and H.R. 6076 contain provisions to rid the Postal Service of billions in liabilities to prefund retiree healthcare.

Regarding future postage rate increases, the bill should incorporate the language in the Senate bill that directs the Postal Regulatory Commission to consider the provisions of the bill before making a determination in the 10-year rate review. Equally important is to eliminate the mandated 2.15% postage increase.  Despite the so-called “consensus” in the mailing industry, I personally have never supported a congressionally mandated rate increase.

If we prioritize first, we may realize that privatization is not prudent and with time, we may determine that it’s not even possible without devastating effects on the critically important service we all so depend.

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