It’s Time to Rethink Postal Reform

It has been more than 10 years since the late Postmaster General Marvin Runyon first talked about the need for postal reform. Recall that Runyon said, perhaps with a bit of hyperbole, that as postmaster general he had no control over “people, prices or products.” Some time later, after much study and industry involvement, Rep. John McHugh, R-NY, forged postal reform legislation, better known as H.R. 22. For various reasons, including the lack of a postal crisis, H.R. 22 went nowhere.

As the story continues, in a condensed fashion, First-Class mail began to slow and show signs of its long-forecast decline. As First-Class mail accounted for well over 50 percent of the U.S. Postal Service’s revenue, this prospect was ominous. Another dark cloud was the ever-rising cost of healthcare, now in excess of $6 billion a year.

The result was much mailing industry pressure to appoint a presidential commission to study the USPS and its environment, and make recommendations for postal reform as/if they saw fit. As we know, the commission did issue a report, which resulted in legislation that passed the House but awaits Senate action.

Though some may disagree, the legislation did largely mirror the aforementioned H.R. 22. It more specifically defined the powers of the Postal Rate Commission and the USPS Board of Governors. But the cornerstone of the bill was that it gave the postal service the right to raise rates annually, as long as the increases were less than the rate of inflation. However, even though labor costs accounted for 80 percent of postal expenses, the legislation largely ignored labor issues.

Now some in postal and direct marketing-oriented trade associations are asking their members to petition the Senate to pass the legislation. These membership requests are based mainly on two other components of the legislation. Those two are relief from paying employee military pensions and a reduction in Civil Service Retirement System pension overpayments.

Though both “relief” changes should be made, they would enlarge the federal budget deficit. It seems to me that it is the height of naiveté to think that Congress will pass, and President Bush will sign, legislation that will increase the size of the federal budget deficit just to help the postal service.

And if that weren’t enough, time is running out as the Senate has its hands full with Iraq, Katrina financing, Supreme Court nominees, bridges in Alaska and the aforementioned deficit. It appears clear that postal legislation isn’t on the Senate’s horizon.

It seems to this writer that it’s time for industry leadership to tell Congress thanks, but no thanks. It is time to can the current bill and go back to square one.

The first thing that needs to happen is the establishment of additional industry leadership. For a long time, the direct mail/marketing industry has been led by its trade association leadership. Clearly this will continue, and that leadership is and always will be indispensable. However, it’s time that individuals from companies that actually pay postage step to the forefront. Too often of late, postage payers have abdicated their voice to industry suppliers, be they printers, software/hardware suppliers, et al. For the industry to be taken more seriously by the powers that be, those who actually pay the postage must step forward.

Therefore, I suggest that the mailing industry convene a new meeting of its leadership to discuss and agree upon the content of a real reform bill.

Obviously, I have my own views of what needs to be included. But first and foremost, a bill is needed that addresses the real issues of importance. Front and center is the issue of labor costs. I do not suggest that the USPS should be allowed to abrogate labor agreements negotiated and currently in force. However, a way needs to be found for the postal service to gain more control over the largest component of its expenses.

Another issue that needs to be addressed in legislation is USPS competitors. How many of us are aware that the company that owns all those freshly painted yellow and red trucks with the big DHL on their sides is owned by Germany’s postal service? Will new legislation let the USPS compete on an equal footing?

Lastly, but perhaps equally crucial: What can be done to get Congress and the administration to keep their sticky fingers out of the postal service’s wallet? First, we need to acknowledge that for as far as the eye can see, Congress will be looking for fresh money, and the USPS is and always has been an easy target.

Therefore, let me make perhaps a radical suggestion, but one that is in place in other countries: an annual dividend from the postal service to the federal Treasury. Such a dividend could be tied to revenue or profit or some other financial measure. I know the whole idea smells, but something needs to be done. Let’s hear other suggestions.

Related Posts