|Postal Service Reform Falls Short|
By Ashton Ellis
Thursday, January 17 2013
In recent years, conservative reformers have enjoyed much success in reforming government agencies. Former Indiana Governor Mitch Daniels shrank wait times at the state’s Bureau of Motor Vehicles and increased approval ratings. Wisconsin’s Scott Walker took on public employee unions and won more flexibility for local school boards to control their budgets. At the federal level, Rep. Paul Ryan (R-WI) continues to propose changes to Medicare and Medicaid that would save those programs from collapse by making them more fiscally sustainable.
But the United States Postal Service (USPS) is one government agency so hopelessly in the red – $15.9 billion at the end of 2012 – that no amount of efficiency testing or belt-tightening seems likely to make up the difference.
That’s not to say that USPS suffers from a lack of would-be reformers.
House Government Oversight Chairman Darrell Issa (R-CA) issued a litany of changes last year in H.R. 2309, titled The Postal Reform Act. As written, the bill would have allowed USPS to eliminate Saturday service, consolidate post offices and require postal employees to pay the same amount as other federal workers for medical and pension benefits.
For its part, the U.S. Senate passed a postal reform bill that reduced workers compensation benefits for postal employees injured on the job from 75 percent to 50 percent. This was a serious cost-savings since the majority of federal employees receiving workers compensation work for the postal service.
Compromise failed when Issa and his Senate counterparts couldn’t agree on how fast to phase-in reform. Issa wants to discontinue Saturday service within six months, and put post office consolidations under a BRAC-like process modeled on military base closures. The Senate bill gave USPS two years to make its own changes before implementing cost-saving measures.
Left in limbo, USPS is trying to increase revenues to prove it’s a viable investment.
A big part of its strategy is outlined in a new report by the Government Accountability Office (GAO). GAO credits USPS with pursuing up to fifty-five new products and services. Almost all of these are extensions of existing postal or non-postal offerings. These include changing P.O. Box numbers to street-style addresses (e.g. 1234 Main St, #56, instead of P.O. Box 56), aggressively advertising USPS locations in retail stores, and improving customer service.
Such alterations are presented as big accomplishments, and no doubt they represent a sea change for USPS’ slow-moving bureaucracy. But many are the kind of commonsense changes a private business would have made long ago.
That is, if those running the business thought the enterprise worth saving. GAO notes that USPS projects a $2 billion operating loss in 2013, even though it generates $65.7 billion in revenue. To get a sense of how little impact the fifty-five new initiatives are likely to make on USPS’ solvency crisis, GAO pegs the current revenue from twelve non-postal services (such as passport photos) at $173 million annually. A back-of-the-envelope calculation says that, on average, each program brings in about $14 million. If all fifty-five initiatives made as much it would add only about $770 million. That still leaves USPS over $1 billion short of breaking even.
The hard truth behind all the rosy projections for USPS’ new era of entrepreneurship is summarized in one insurmountable statistic: USPS mail volume has fallen 21 percent from fiscal years 2007 through 2012. The main reasons are customers who prefer email and online payments to handwritten letters and checks in the mail.
That trend is only likely to continue with the growing popularity of online messaging and purchases.
Instead of trying to apply their reform savvy to an ailing postal service, it may be time for conservatives to let consumers have what they increasingly want – private sector mail carriers.
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