July 25, 2018

Big Event Coming Soon

This is a reminder that a big event will occur in the postal world within 16 days, and also a suggestion to keep calm.  On April 12 of this year President Trump signed an Executive Order on the Task Force on the United States Postal System.  The Order specifies that a report must be delivered within 120 days, which would be August 10:

Sec. 5.  Report.  The Task Force, acting through the Chair and the Director of the Office of Management and Budget, shall submit a report to the President, in coordination with the Directors of the Domestic Policy and National Economic Councils, not later than 120 days after the date of this order.  In its report, the Task Force shall summarize its findings and recommendations under sections 3 and 4 of this order.

Separate Report Causes Anxiety

A number of participants in the Task Force process, after expressing some optimism about the possible recommendations, reacted with vocal alarm and opposition when the administration tipped its hand in another report called Delivering Government Solutions in the 21st Century (DGS21C).  Released on June 21, this report covers much of the federal government and devotes two and a half pages (pp. 68-70) of 132 total pages to the U.S. Postal Service.

The negative uproar is all about the goal the report sets to privatize the USPS.  This objective would only come into play after the Postal Service house is set in order.  The DGS21C report recognizes, what should be obvious to all, that no private investor with adequate resources would choose to take over the Postal Service in its current state.  And it offers private sale as an option in its first sentence: “This proposal would restructure the United States Postal System to return it to a sustainable business model or prepare it for future conversion from a Government agency into a privately-held corporation.” (Note the use of the conjunction ‘or’ to indicate an alternative.)

Ironically, returning USPS to stability, sustainability, and sounder finances is something everyone agrees on.  Unions, postal management, mailers, mail service providers, parcel shippers, postal suppliers, Senators, Congressmen, regular citizens, legislative lobbyists, DGS21C, you name it, all agree that USPS needs work to get back to revenue fully covering costs, both operating and retirement promises.  We don’t all agree on the best way to get there.  But one of the problems with solutions proposed so far is that many are very limited in their approach.  For example, raising postage rates several points above the rate of inflation while failing to address the cost side would be a disaster and would only hasten the demise of our postal system.

Let’s Not Throw the Baby Out with the Bath Water

We respectfully suggest that rejecting the Task Force recommendations before they are made because of the distant threat of privatization is a bit like tilting at windmills and possibly throwing the baby out with the bathwater. Complete privatization of the USPS is not an imminent possibility.  Privatization will only become a viable issue to be debated if and when USPS returns to financial sustainability.  And we currently do not have a comprehensive game plan to get there. In fact, we have some partial solutions that could make matters worse.

We hope USPS gets to the level of success as a government agency that there would be a market to buy it.  Then we can debate whether continued government management works better than the private sector.  And we would anticipate that once USPS is successful again, the political drumbeat to privatize it will subside.  Why mess with a good thing?

Further, USPS has been in the process of “privatizing” for decades.  The use of the private sector to prepare mail, barcode mail, presort mail, dropship mail, evidence postage payment for mail, and truck mail have all been key components of the success of the Postal Service since the 1970s.  It is not clear why we have a “sky is falling” reaction to the mere mention of privatization.  If privatization has in fact reached its ideal point with the USPS then is likely will be a moot point.

The much more clear and present danger to the postal system, especially to its customers who provide the revenue to cover costs, would be implementation of a one-dimensional change that would drive volume and relevance out of the system.  What is needed is a wide-ranging set of real reforms that address all aspects of the system.

Given the broad approach the Task Force seems to be taking, it is likely that readers of its report will not be happy with all of the recommendations.  No one can endorse a report they have not seen.  But equally risky would be a full-on rejection of the report before it is issued.  It is fair and reasonable to express opposition to privatization, but we should not throw out the possibility of comprehensive reform along with privatization.

Open Mind

In the interest of keeping an open mind, and avoiding detrimental one-dimensional “solutions,” the Alliance issued the following statement five days after DGS21C:

June 26, 2018

Statement on the USPS section of the June 21, 2018 Executive Office of the President Report: Delivering Government Solutions in the 21st Century

The Alliance of Nonprofit Mailers will respect the process and wait for the August 10, 2018 report by the President’s Task Force on the United States Postal System.  We agree that USPS needs to align revenues and expenses to restore a sustainable business model.  Postal expenses and productivity are out of line with the competitive private sector.  We believe that simply raising rates above inflation for current customers is an unworkable and very hazardous strategy.