Congress ties Postal Service into knots

Original Reporting | By Kevin C. Brown |

Some of the OIG’s ideas came from the Postal Service’s own history. From 1911 through the late 1960s, post offices offered savings accounts to Americans. Dean Baker explained that this idea still has legs: “One of the issues we are seeing, a growing issue, is a very large non-banked population, so if the post office were to offer basic banking services that would be a way that it could offer a very important service to a lot of low and moderate income people and do it at a profit…It’s already in every neighborhood.”

But developing these, or other possibilities, requires capital investment, and the accelerated prefunding rules contributed to the OIG’s unsurprising conclusion that the Postal Service “lacks the operating capital to invest in both revenue generating and cost reducing initiatives.”

The PAEA did expand and streamline the ability of the Postal Service to offer volume discounts on postal products, like overnight and parcel delivery. Stung by the unprofitability of initial Postal Service forays into non-postal services like e-commerce during the 1990s and early 2000s, however, Congress prohibited the Postal Service from offering new non-postal products.


Well, maybe don’t act like a business

Rep. Dennis Ross (R-Fla.) is co-sponsoring a bill introduced by Rep. Darrell Issa (R- Cal.) that would allow the Postal Service to make rapid and significant cuts in service, renegotiate contracts with postal unions under terms significantly less advantageous for workers, and partially reduces the retiree health benefit payments for two years, before increasing them by the corresponding amount for the following two years. These are changes, Ross said, that are necessary to “allow the post office to operate within its anticipated revenue stream.”

 “I would have given the post office a much freer hand. If it were up to me, I’d let them operate as a business and let them compete with these other guys [shippers like UPS and FedEx] a little bit. I think it brings greater competition and more innovation.” — Former Rep. Tom Davis

The bill would not allow for the Postal Service to resume offering new non-postal products, with the exception of allowing advertising in its facilities or on vehicles. Nevertheless, Ross told Remapping Debate that “I don’t think you discount or neglect innovative opportunities for the Post Office to engage [in]” that might let it expand.

Ross described how the Postal Service could be a “pioneer” by transitioning the Postal Service’s vehicle fleet to natural gas, and establishing filling stations at some postal processing facilities or post offices, which could then also serve private consumers who purchased natural gas vehicles.

Yet he doesn’t think that the U.S. government should have a “competitive advantage” over private business.

Take the possibility that the Postal Service would once again provide banking services to citizens. He acknowledged that “we have the outlets,” that “we can do banking cheaper than anyone else,” and that doing so would enable to Postal Service to “gain revenue.” Nevertheless, it is a possibility that Ross foreclosed because he sees banking as an “essential function” that is “outside of government.”

Elaine Kamarck, a lecturer in public policy at the Kennedy School of Government at Harvard, and a former Clinton administration official who managed the National Performance Review, or “reinventing government” initiative, has also studied postal issues. In a conversation with Remapping Debate, she was skeptical that the Congressional call for the Postal Service to operate more like a business was anything more than empty rhetoric. “Think of all the companies that are kind of in this business,” she said, citing Federal Express, UPS, and their retail packing, shipping, and printing operations. Do those calling for a business-like Postal Service really want the Postal Service to compete all-out against private businesses? “When push comes to shove,” Kamarck said, “I’m not sure that’s the case.”


Very different legislative directions

The Senate earlier this year passed a bill sponsored by Joseph Lieberman (I-Ct.), and co-sponsored by Sens. Scott Brown (R-Mass.), Thomas Carper (D-Del.), and Susan Collins (R-Me.), that would modify the required payments for the retiree health benefit fund to amortize the remaining costs over a period of 40 years, and would allow the Postal Service to offer non-postal products. The bill also provides for the establishment of the position of “chief innovation officer” who would be responsible for directing a strategy to identify new postal and non-postal products that could improve both the Postal Service’s financial position and serve the public interest.

The bill, which prohibits reductions in delivery standards for three years and a reduction to five day per week delivery for two years, also seeks to moderate the scope and timing of any postal facility reductions. An alternative proposal offered by Sen. Bernie Sanders (I-Vt.), and subsequently introduced in the House by DeFazio, would have flatly and permanently prohibited any reduction to five-day-per-week delivery or an increase in expected delivery time for first-class mail.

In the House, the bill introduced by Rep. Issa, with its very different agenda, has been passed by the Oversight and Government Reform committee but has not been voted on by the full body.

Former Rep. Tom Davis, the veteran from PAEA days, meanwhile, doesn’t “look for anything” in this year’s lame duck session, noting the lack of interest from Congressional leadership and the White House.


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