The Senate is gearing up for a final vote on the Postal Service Reform Act, which has already passed the House and already cleared the filibuster hurdle. The big-picture problem is that the business model of the U.S. Postal Service is outdated in a world of falling mail volumes that can no longer support the USPS’s expensive structure, including a unionized workforce and a six-day-a-week universal national-delivery mandate.
Other nations are ahead of us in adjusting their mail systems to 21st-century realities. Those realities are hard to face, given the proud history of the Post Office, and America’s needs are different from those of smaller, more compact European countries. Changing universal daily-delivery mandates would, for example, require adjusting laws (from bill collecting to jury notices) that assume that people get mail on a daily basis, and could complicate efforts to expand voting by mail. These are complexities, but they are not insurmountable. Congress could, for example, compensate the Postal Service for expanded delivery of ballots in the weeks before a federal election without the need to maintain daily delivery year-round.
Unfortunately, the bill contains only the most tepid reforms. Universal delivery mandates are unchanged, and so is the basic legal and labor structure of the USPS. Short of changing the USPS delivery mandates or its wage and benefit structure, there are only two solutions. The business answer is to expand the USPS business lines to make more money from package delivery. The government answer is to get on the train of permanent, ongoing federal bailouts. Both solutions create problems of their own.
The problem with the business answer, which is favored to varying degrees by Postmaster General Louis DeJoy and also by the unions, is that we already have a private package-delivery industry (Federal Express, UPS, DHL), and the USPS can take business away from its competitors only by leveraging the advantages conferred by its status as a governmental entity. The proposed bill smuggles in some suspiciously ambiguous language that may make it easier for the USPS to evade its own rate regulator in shifting the costs of the package delivery business onto its monopoly mail business, with the downstream result of effectively subsidizing big package mailers such as Amazon. The Senate ought to delete that language.
The larger scandal is that the Postal Service Reform Act is itself a de facto long-term federal bailout. One of the biggest changes in the bill is that it dumps USPS retiree health-care costs onto Medicare. Previously, USPS retirees had USPS-provided health insurance, and a 2006 law required the USPS to fund its future health-care obligations so it wouldn’t just dump them on the taxpayer when they got too big. Now, exactly that is happening. The Postal Service projects that the combination of putting its retirees into Medicare and ending its obligation to pre-fund future retiree health benefits will save it $48 billion over the next decade. Guess who gets stuck with that tab?
The Senate should return this bill to sender.