
The following is a perspective by postal commentator Gene Del Polito. The views expressed are solely the author's.
THE ULTIMATE TEST OF ANY POSTAL REFORM MEASURE
(1) It must ensure the fiscal viability of the U.S. Postal Service,
(2) It must ensure the Postal Service is set up to operate on a self-sufficient basis, and
(3) It must ensure the ability of the Postal Service to satisfy the nation's postal needs.ANY legislative proposal that cannot do this should go back to the drafting table.
"Do it once and do it nice otherwise you'll do it twice." -- Sister Maria Cortilia
(Parochial School Teacher)
The boys and girls from Congress are back in town. I suppose that might mean they'll be getting back to work. Then, again, there really wasn't much real work that Congress did in its last session. But, I digress. There's no reason to start off this legislative year sounding a negative note. We can leave all of that to those who will be electioneering throughout the year.
So, what will be the story this year on postal reform? Before we get into that, let's first get real clear on what the nature of the problem postal reform is supposed to address.
The one significant challenge that's facing the U.S. Postal Service is a very simple to discern: Its costs outstrip by a significant margin its ability to cover those costs with postage-paid revenue. Set aside for a moment all the rationalizing as to why this is so. No matter the reasoning, the result is still the same. Too many costs; not enough revenue.
Now, before we go any further, let's dispell the myth that simply raising postal rates would provide the most economically sound means for righting the Postal Service's fiscal imbalance. Besides perhaps raising rates would increase revenue for some very short period of time, raising postal rates, particularly in this economy, will only hasten the move of business out of the mail and into some other more cost-efficient digital alternative. Raising rates simply will hasten the impetus to remove whatever obstacles remain from making most of how we communicate and do business in this nation a digital thing.
That means that whatever revenue increase a signficant change in rates might win would be more than lost from the flight of business out of the mail. To make matters worse, raising rates beyond inflation any time soon would be tantamount to institutional suicide, since absolutely nothing would have been done to reduce the costs associated with the Postal Service's human and physical infrastructure to bring postal costs and revenues within balance. What the Postal Service needs more than anything elseis to be able to more closely match its mail processing and delivery resources to levels that can be reasonably anticipated and sustained by mailer-provided revenue in the years ahead.
No turnaround in the national economy will bring mail back to pre-recession levels. Most of what we see today is the result of an electronic transformation in the way we do business, and not primarily the result of a dismal economy. What's been lost is lost, and there will be more that will be lost if Congress fails to act. The only question is whether the decisions Congress makes will foster a cost-efficient and reliable universal mail delivery service or simply kill it off.
So, what about those costs?
The Postmaster General has told Congress (and just about anyone else who has ears to hear) that there are seven key things that need to get done to reduce the Postal Service's cost structure by $20 billion by 2015 and get postal costs and revenues in balance.
(1) Allow the Postal Service to move from a six-days a week delivery to five-days.
(2) Eliminate excess capacity in the postal network.
(3) Reduce to a more sustainable level the postal workforce complement.
(4) Resolve all retirement health benefit funding issues
(5) Return whatever overpayments there have been to the Postal Service's FERS account.
(6) Allow the Postal Service to restructure its healthcare system and make it independent of FEHBP.
(7) Allow the Postal Service to take over and administer postal employee retirement programs.
The Postal Service has estimated that the steps listed above would produce the following savings:
Network optimization........ $6.5 billion
Changes to health and retirement programs.........$5.0 billion
Moving to five-day delivery........$3.1 billion
Resolving the USPS' retiree health benefits pre-funding......$5.5 billion
According to the PMG, setting right the Postal Service's finances by 2015 is essential, if the USPS is to survive as a self-funding government and economic infrastructure service. Last year, there were several bills introduced in Congress that ostensibly were intended to set right the Postal Service. But how well do any of those proposals fare when you evaluate their ability to trim $20 billion in costs by 2015?
To put it simply, not well. In fact, there is no one legislative proposal that comes close to achieving $20 billion in cost reductions within the targeted timeframe. The only proposal that even approximates significant cost rebalancing is HR 2309, the Issa-Ross postal bill. Yet changes made during markup, according to the Congressional Budget Office, would produce only $18 billion in cost reductions and that over a ten year period. Quite obviously, the Issa-Ross bill would produce an effect that would be more than a day late and a dollar short. Unfortunately, no other proposal even comes close to the savings that Issa-Ross promises.
Despite the mark the PMG laid out for Congress to produce an effective postal fiscal remedy, congressional criticisms abound over one aspect or another of the PMG's proposals. Congressional carping has done absolutely nothing to make getting a longer lasting remedy to the nation's postal ills even a remote possibility. The particular need for a remedy that is "longer lasting" stems largely from the congressional insistence that they don't want to find themselves dealing with postal reform again anytime soon. All of the bills introduced thus far, however, would provide at most a brief respite from the need for subsequent postal reform.
Let's be clear here. This is not to say that any one bill or another is bad or better than any other. When it comes to this issue, good or bad should not be part of the postal reform lexicon. All that matters is whether or not a bill works, i.e., that it succeeds in producing a longer lasting remedy for the Postal Service's fiscal and operational challenges.
Congress has a great deal of work ahead of it. Does anyone know exactly what provisions Congress needs to include in a reform measure? No. All anyone can say is that nothing seen thus far will achieve the end of producing a longer lasting reform of the nation's postal laws.
Must any postal reform measure come up with a remedy that is longer lasting? No, Congress can do what congresses often do. i.e., come up with something that offers a short-gap remedy and readdress the issue when the remedy is no longer efficacious. If this is the path Congress intends to take, then everyone should abandon the hope that when something is enacted, Congress won't find everyone back on the Hill taking again about the need to take reform further.