Postal Service should adapt, not angle for a bailout

Postal Service should adapt, not angle for a bailout

Darrell Issa
PE.com
December 18, 2011

The United States Postal Service is in a full-blown financial crisis and unless Congress acts now, a taxpayer bailout is all but inevitable.

The USPS is a semi-independent, self-funded federal agency and is America’s second largest civilian employer. Most Americans don’t realize that at this moment, the USPS has no more than one week’s cash on hand. It has maxed out its credit limit and by next summer, it will be unable to meet its payroll obligations.

The source of these troubles is not a requirement that the Postal Service fund the health care and pension benefits that its employees rightfully earn. The problem is not even that email has taken away the Postal Service’s business. The main problem can be summed up in one word: procrastination.

The transition of business communication from paper to paperless technology is the most direct reason that mail volume, especially highly profitable first-class mail, has declined. For the rest of the industrialized world, the evolution of e-commerce isn’t viewed as a problem, but as an opportunity to adapt their enterprise to meet the different needs of the 21st century.

The advent of technology has undermined the business model of the Postal Service. Simply put, by delaying necessary changes to adapt to a changing world, the USPS, clinging to an antiquated business model, is now facing financial collapse.

Inflexible congressional mandates and impractical union agreements have raised serious questions as to whether or not the USPS can make the necessary changes even if it had the will to do so.

Yet, those who wish to preserve this absolutely unsustainable status quo are once again marshaling their forces against meaningful postal reform.

Their solution is to make any change appear to be so politically costly and painful that Congress feels it has no choice but to offer the Postal Service an enormous taxpayer-funded bailout. Those who believe that the congressional mandate to deliver every day but Sunday must be preserved might as well be asking us to revive the Pony Express.

Polling by Quinnipiac University shows that Americans strongly favor ending Saturday delivery if it will make USPS solvent. Juxtaposed with the idea of losing service altogether because the Postal Service goes bust, moving to a five-day delivery schedule just makes sense.

Among all Americans, 79 percent favor making this change, and only 20 percent oppose. Postal reform is one of the few nonpartisan issues where clear consensus exists among Americans across the ideological spectrum.

Among Democrats, 74 percent favor the change and only 25 percent oppose. Independents support the change 80 percent to 19 percent. The poll shows there is no constituency whatsoever for retaining six-day delivery if it means the Postal Service cannot remain solvent.

But why should we be surprised to see these numbers?

The average household received five mail pieces daily a decade ago. It now gets four pieces a day. Three pieces a day is projected by 2020. Total mail volume is down 46 billion pieces since its peak in 2006. First-class mail volume will be 50 percent off its peak by 2020. A shift to five-day service for mail is not something that is being forced on the American people. It is simply realizing that the Postal Service needs to adapt to the changes that are already being made.

Saving the Postal Service and returning it to solvency means we must act now to reduce current operating expenses to come in line with falling revenue. Half of the postal workforce is involved in delivery and 80 percent of Postal Service costs are for pay and benefits.

The postmaster general estimates that moving to five-day delivery would save $3 billion annually. Importantly, his plan has a number of steps designed to preserve access to mail, including keeping post offices open on Saturday, delivering mail to P.O. boxes, and continuing to deliver express mail seven days a week.

Congress does not need to legislate the end of any delivery day. A congressional mandate in place since 1984 has prevented the Postal Service from making this change on its own years ago.

The reality is the needs of the American people have evolved since the inception of the Postal Service and since the six-day mandate was put into place. The choice the United States Postal Service faces is simple: Adapt or die.

Darrell Issa represents the 49th Congressional District in the House of Representatives. He is chairman of the House Committee on Oversight and Government Reform.