Possible changes to the U.S. Postal Service are gaining significant momentum as Congress continues its legislative deliberations this summer. The proposal vehicle in question, known as the Postal Service Reform Act (PSRA), received positive reviews in the House of Representatives, and a Senate version was also recently released.
Despite accumulating 63 pages of legislative text, the bill emphasizes fiscal sleight of hand to achieve short-term stabilization, while leaving a massive amount of the Postal Service’s future in doubt.
The hallmark of the package is a $46 billion bailout of healthcare benefit provisions. These unfunded liabilities have added up since the USPS began defaulting on payments for retiree benefits in 2012.
The depths of such blanket debt forgiveness should be enough to make fiscal conservatives cringe at the sight of more government intervention — especially when the federal government is more rightly looking to support key U.S. industries, small businesses and job creators who were badly affected over the past year due to no fault of their own.
Another cringe-worthy issue with the proposal is a bizarre element that would further reduce the Postal Service’s monitoring of its own costs and revenue inflows. As the agency’s multi-billion-dollar losses persist year after year, it hardly makes sense to dial back transparency and leave accounting managers off the hook.
The provision in question involves a statute that calls for the Postal Service to ”maintain an integrated network for the delivery of market-dominant and competitive products.” To be sure, it is sensible that the Postal Service carries both letter mail and packages together for the sake of delivery efficiency from one address to the next. In this sense the USPS already has an ”integrated network.” However, as a government-chartered operation, the Postal Service must be compelled to fully articulate the financial differences between its essential public service, and its products that are subject to the risks of the competitive market.
With this glaring understanding, lawmakers should be outraged by this ”integrated network” item that blurs the lines of the Postal Service’s finances. The chaotic nature of USPS fiscal management truly demands that we don’t throw away essential precautions. Instead, more analytical tools must be used to reinforce transparency about the separate impacts of every service — mail, packages and everything else.
With the PSRA, the Postal Service would benefit from major fiscal flexibilities, while it would also enjoy diminished responsibilities when it comes to delivery performance goals. This prospect of even more delayed mail delivery, coupled with all the irresponsibility of reform should be especially concerning to key Senate leaders.
Policymakers including Sen. James Lankford, R-Okla., Sen. Rand Paul, R-Ky., Sen. Rick Scott, R-Fla, Sen. Ron Johnson, R-Wis., Sen. Josh Hawley, R-Mo., and Sen. Mitt Romney R-Utah, must be especially concerned about the nature of deeply consequential bailouts and leaving millions of constituents who rely on the mail hanging out to dry.
Forcing American customers, especially those in harder to reach rural areas, to deal with more frequent mail slowdowns and higher stamps prices simply only adds insult to injury.
In parallel with the PSRA, Postmaster General Louis DeJoy has proposed a 10-year business plan for the Postal Service, which assumes that Congress will agree to the $46 billion liability bailout in order to kick-start systemic changes that would rebalance costs and revenues. However, these important plans may never see the light of day. Democrat leaders in Congress have spent January, March, and June organizing campaigns to ensure that Postmaster General DeJoy is soon fired from his role.
Senate leaders must be wise to see how the grand Postal Service bargain is destined to burst at the seams and there is simply no reason to swallow this bitter legislative pill. The political ramifications of Postal Service reform demands all-inclusive measures, and it is entirely clear that the Postal Service Reform Act is incomplete and would be detrimental for Americans.
Keep the STOP Act to halt the Opioid Epidemic
The Synthetics Trafficking and Overdose Prevention Act, more commonly known as the STOP Act is a bipartisan bill, that was signed into law in October 2018 in order to reduce the amount of illicit items traveling through the U.S. Postal Service in the United States. This law was specifically designed to help close an existing loophole that has allowed illicit drugs, which have contributed to the nation’s opioid crisis, to be transported into the United States via USPS.
Unfortunately, the forces in Washington, DC are considering measures that would effectively pause the progress in compliance, or adjust the compliance thresholds of this law, either of which would negatively affect the identification and prevention of the spread of illicit and illegal distributions.
The Postal Service Should Do What Other Shippers Do to Reduce Illegal Drug Shipments
The STOP Act requires the USPS to gather advance electronic data (AED) for inbound international packages. It requires foreign postal operators to include fields such as the item identifier, sender’s full name and address, recipient’s full name and address, stated content description, unit of measure and quantity, weight, declared value, and date of mailing. With the tightened security, it helps reduce the number of bad actors who use the USPS loophole to get drugs into the country. This reform was pushed for by both lawmakers and stakeholders for years. The STOP Act is a sensible, necessary, solution to deadly epidemic in the United.
The need for solutions like the STOP Act has been in the works since 2016 and regrettably the deadly opioid crisis has continue to spread and we still desperately need this precaution in 2021. Preliminary federal data found that 87,000 Americans died of drug overdoses over the 12-month period that ended in September. This marks the highest amount since the opioid epidemic began in the 1990s. The data shows that the coronavirus pandemic unquestionably exacerbated the trend as the largest increase in overdose deaths occurred in April and May of 2020.
It is disappointing that the Biden administration is passing up on an opportunity to keep Americans safe. While the USPS was able to increase the number of inbound international packages reporting AED to 67 percent in January of 2020, it failed to reach its goal of 100 percent of packages by the deadline imposed in the law, January 2021. Robert Cintron Vice President, Logistics United States Postal Service noted that the coronavirus pandemic impacted international mail shipments, affected their ability to do so, but as our country moves forward it is absolutely imperative that we refocus on this important issue.
The Biden Administration Should Keep America and Americans Safe by Enforcing and Upholding the Law
It is vital that we continue to advocate for these solutions as they have the potential to save lives across the country. Therefore, it is imperative for the U.S. Department of Homeland Security to go back to the drawing board on its proposed rules for collection of advance electronic information for international mail shipments, and the frameworks for collaboration between the U.S. Postal Service and the U.S. Customs and Border Protection (CBP). American citizens depend heavily on these critical safeguards for protecting our mail system. And it isn’t asking too much for the USPS to live up to similar standards of professionalism as other carriers who have been protecting parcels shipped into America for years. Moreover, the USPS shouldn’t allow itself to be used as a mule — shipping illegal and deadly drugs into America — because of its unwillingness to live up to industry standards that protect all Americans.
The future of the United States Postal Service isn’t really in President Trump’s hands, despite what his critics are saying. The service is hemorrhaging money.
The COVID-19 crisis has imposed demands on the USPS that may be unprecedented. And Congress may eventually need to provide some emergency assistance for it to survive. But its future course will be charted by others. The one person who really counts is Louis Dejoy, the North Carolina businessman whom Trump recently named (and whom the postal Board of Governors unanimously approved) to be the next postmaster general.
Critics have derided Dejoy as nothing but an influential GOP fundraiser and Trump supporter named to the job to carry the president’s water. That’s unfair. He’s a successful entrepreneur who, in 1983, started a company, New Breed Logistics, that brought him into collaboration with the Postal Service as well as Boeing, Disney, and other well-known U.S. companies needing supply chain logistics, program management, and transportation support.
After New Breed was acquired by Connecticut-based XPO Logistics for more than $600 million, Dejoy became CEO of its supply chain business and, after he retired in 2015, a member of the board of the parent company. Clearly, he knows a thing or two about shipping, packaging, and the other functions that are the core business of the U.S. Postal Service.
He’s only the fifth person from outside the Postal Service chosen to lead it since 1971 when it was spun-off as a quasi-private corporation. His experience in private business should be a tremendous asset in helping right a ship afloat on a sea of red ink.
Hopefully, he will be of independent mind and push back against Trump’s instant call to triple, quadruple, or quintuple the price the Postal Service charges to ship packages. It’s one of few parts of the USPS that makes any money — according to some estimates, it now accounts for over $8 billion in net annual revenue — because it competes effectively with private shippers.
Trump’s plan to charge more to get more would work if the package service functioned like first-class mail, over which the Postal Service has a monopoly. It doesn’t, so raising package delivery prices will not work as he hopes. The environment is highly competitive, meaning one vendor’s price increases will generally drive customers to other vendors who do the same thing, but cheaper.
What the president wants will add to the Postal Service’s operating debt, not pay it down. As an experienced, successful businessman, Dejoy should be able to comprehend this easily. The question is whether he can resist the political pressure coming from 1600 Pennsylvania Ave. once he takes over on June 15.
None of this is an argument against postal reform. The USPS is in bad trouble, has been for years, and can’t make up its debt just by raising the price of stamps. Serious changes are needed, the kind which postmasters general coming from inside the service probably reject instinctively. If Congress is to give the Postal Service the money House Speaker Nancy Pelosi and others say is needed to see it through the end of the year, reform is in order. Handing over a blank check without insisting things be done differently would just be putting off the inevitable.
Postal reform legislation is unlikely in the middle of the COVID-19 crisis, but there are steps Dejoy can take that Congress, the board of governors, and the American taxpayers would probably endorse enthusiastically. The first would be to announce a hiring freeze — a tactic common in private business when annual revenue looks to be less than expenses. The second would be to order a thorough audit of USPS-owned and leased real estate in preparation for selling, subdividing, and surrendering space that is no longer needed. The third would be to embark on a program to expand third-party relationships in midstream logistics and processing, which, remember, is the industry in which the future postmaster general proved himself to be quite adept.
The USPS doesn’t need to keep doing everything it does. It doesn’t need to keep losing money. It doesn’t need to be a living synonym for waste, sloth, and mismanagement. And it doesn’t need to keep getting bigger while its assets and potential pool of clients get smaller. What it does need to do is find a pathway to profitability. That will only come from focusing on core functions growing out of its universal service obligation. The sooner Louis Dejoy starts down that road, the better things will be.
Frontiers of Freedom expressed great alarm this week over the U.S. Postal Service’s (USPS) latest financial results which showed $748 million in losses during the first quarter of FY 2020.
George Landrith, President of Frontiers of Freedom, said:
“The U.S. Postal Service is hemorrhaging money! In the first quarter of FY 2020, they have already reported $748 million in losses. And it isn’t like 2019 was a good year. Last year, they lost an unbelievable $8.8 billion in FY2019. To put that into perspective, the Postal Service has posted 13 consecutive years with a net loss of a billion dollars or more, and its unfunded liabilities and debt now total more than $143 billion. It is extraordinarily difficult to lose that kind of money when you are operating a government-granted monopoly like the Postal Service has on First Class Mail.”
Frontiers of Freedom President George Landrith also called out the agency over its negligence and financials, stating:
“It is readily apparent that the current USPS business model is failing. It is up to Congress, the Postal Regulatory Commission, and the new heads of the USPS Board of Governors to address the ongoing challenges. This includes ending nonsensical postal subsidies, trimming down the agency’s excessive costs, and complying with new laws impacting the USPS.”
Frontiers of Freedom previously hailed the work of Congress and President Trump to address some of USPS’ major systemic flaws with the enactment of the Synthetics Trafficking and Overdose Prevention (STOP) Act in 2018. This bill was an essential step in requiring the Postal Service to meet industry standards in data collection and monitoring practices of packages that enter the U.S. from abroad.
Despite the required protocols to protect our communities from hazardous and criminal items, the Government Accountability Office reports that USPS continues to fall short on its requirements to provide Customs and Border Protection (CBP) with advanced electronic data (AED).
Failing to keep up with the directives of the STOP Act prompts further troublesome questions as the Department of Homeland Security embarks on robust initiatives to impede the flow of counterfeit and pirated goods. However, in assessing the Postal Service, DHS finds a “significant gap in the information CBP receives,” among numerous critiques and findings. Landrith remarked, “Ultimately, the work to intercept illicit drugs and contraband is an immense challenge, and there is simply no excuse for USPS to not do its part.”
On the USPS’ array of responsibilities, Landrith concluded:
“Americans should be greatly concerned about the USPS procrastinating on its priorities. Looking ahead, it is crucial for the board to install a new Postmaster General with well-qualified business expertise. The demands of stakeholders, legislators and citizens continue to go unanswered. The path to reform will be wide-ranging, and USPS leaders and lawmakers will need to act with urgency.”