My Turn: Here’s how to save the postal service
FILE - In this Thursday, Feb. 7, 2013, file photo, packages wait to be sorted in a Post Office as U.S. Postal Service letter carrier Michael McDonald, gathers mail to load into his truck before making his delivery run, in Atlanta. The financially struggling U.S. Postal Service said Wednesday, Aug. 14, 2013 it is revamping its priority mail program as part of its efforts to raise revenue and drive new growth in its package delivery business. (AP Photo/David Goldman, File)
Can the U.S. Postal Service be saved? The answer is a resounding yes!
The oldest government entity has been through a great deal over the past 239 years. And the worst time in its storied history has been the past seven years, largely through no fault of its own.
A law called the Postal Accountability and Enhancement Act of 2006 was passed in the wee hours of the morning in December 2006. Its design was to level the playing field for the U.S. Postal Service and its competitors. But a single paragraph in that legislation has nearly destroyed the postal service. That paragraph is the $54 billion requirement to pre-fund retiree health benefits at the rate of $5.4 billion per year for 10 years. The postal service must write a check for approximately $450 million per month to the federal government to pay down the debt. Everyone has read about the billion-dollar losses and current lack of borrowing power of the postal service as a result of a well-intentioned bill that could mean the demise of the postal service.
It is not fair to blame all of the postal service issues on Congress. The postal service management and its unions deserve some of the blame. Poor management decisions over the years and unrealistic union demands have also been responsible for a portion of this very serious problem.
The present Congress has an opportunity with bipartisan cooperation to change some of the elements of the 2006 law and return the postal service to solvency. It is worth noting that from 1994 to 2006, the postal service retired nearly $13 billion in debt and saved the postal rate payers nearly $14 billion in costs while maintaining the best service and safety in its history. With some dynamic changes, the postal service can help our economy and ensure its integrity for years to come.
Some of what should be included in the new Postal Reform Act is as follows:
First and foremost, Congress should allow the postal service to use overpayment in the Federal Employees Retirement System to retire debt obligations. And it could allow the postal service to modify its obligation regarding the Civil Service Retirement System annual payment of $5.4 billion per year to a change of approximately $1 billion per year until 2054. It could also allow the board of governors to change rates prior to Postal Regulatory Commission approval.
Adjust first-class rates
Next, Congress should address the fact that the present first-class postage rate is out of balance. The single-piece first-class rate is now 46 cents for stamps bought by the average consumer. The presort rate for volume customers, such as utility companies, credit card companies and other high-volume mailing companies, is 36 cents per piece.
What few people not in the business realize is that a large U.S. industry exists to sort the large-volume mailers’ letters into walk- sequence order. They receive a first-class rate of 36 cents per letter. That is a full 10 cents lower than the average consumer. The genesis for this much lower rate was to help the postal service more efficiently sort the billions of pieces of mail it handled each year. From 1988 until the mid-2000s, when postal service automation was in its infancy and still improving, the discount was very helpful.
Now that the postal service has its automation process running efficiently, these large-volume discounts are not necessary.
Every penny on the first-class postage rate equates to $1 billion. If Congress would allow the postal service to reduce that 10-cent discount to 5 cents, it would increase revenue by $5 billion per year.
This effort, in conjunction with tweaking the rates of bulk business mail, could increase revenue by an additional $1.5 billion to $2 billion a year. Such bold action would allow the postal service to forgo future rate increases similar to the Jan. 26 increase and possibly for the first time in its history even lower the first-class rate in the future.
The future success of the postal service also requires postal unions to change – things such as handling grievances off the clock, the way UPS does, with the at-fault party in the grievance process paying all. And one of the biggest cost-saving measures would be to allow letter carriers, clerks and mail handlers, to cross crafts.
This would be a huge saving and help address the problem of some crafts having excess employees while other crafts have critical shortages.
All of these changes will be hard for special interests to swallow. The choice is simple. Allow the postal service to fail or make these changes as well as others being discussed in the Postal Reform Act of 2013 and allow the Postal Service to serve the nation as a productive part of the economy.
The legislation must have bipartisan buy-in and cooperation.
To that end, Congress and the citizens who depend on the postal service should know the following: In Fiscal Year 2013 operations (the collection, processing and delivery of mail), the postal service broke even.
The huge losses mentioned in the news media are a result of the $5.4 billion payment per year over the past six years. It is time for action.
(Jim Adams of Pittsfield is former chief of staff for three postmasters general.)