Post Office Urges Legislative Reforms to Reverse Massive Losses

Postmaster General Megan Brennan testified before a congressional hearing Tuesday to urge legislative reform so that the postal service stops hemorrhaging funds.

The United States Postal Service (USPS) reported a net loss of $5.3 billion last year alone. The House Oversight and Government Reform Committee introduced a bill to help the postal service reverse the trend. Brennan testified before the committee in support of the bill. She argued the postal service has already undergone reforms, but current law prevents adequate changes. Last year marked ten consecutive years of losses.

 

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“Despite our achievements in growing revenue, and improving operational efficiency, we cannot overcome systemic financial imbalances, caused by business model constraints,” Brennan said before the committee. “Without legislative and regulatory reform, our net losses will continue, and our financial position will worsen, threatening our ability to meet America’s evolving shipping and mailing needs.”

Brennan adds that growing shipping networks with declining revenue is a driving force behind the losses. The postal service streamlined its operations, restructured its networks, reduced the size of its workforce, and improved productivity. She notes the reforms resulted in $14 billion in annual savings.

The USPS can only enact so many reforms before interfering with congressionally-mandated restraints. The reform bill addresses the problem in several ways. It’s designed to reform the postal service retirement plan, give the postal service more flexibility with pricing, and allow for services not traditionally covered by the postal service.

“Medicare integration is the cornerstone of your bill,” Brennan said. “The civilian federal government is not required to pre-fund retiree health benefits. But that obligation is imposed on the postal service. We are merely asking to be treated like any business that offers health benefits to their retirees and has to fund them. Full integration with Medicare is a universally accepted best practice in the private-sector.”

Brennan added that the postal service has defaulted on $33.9 billion in mandated retiree payments since 2012. The bill is bipartisan and has support from the postal service and its unions. Not everyone, however, is happy with it. R Street Institute senior fellow Kevin Kosar argues the legislation merely keeps the postal service afloat instead of innovating to be better.

“It doesn’t show imagination for the future,” Kosar told InsideSources. “Digital communications is the norm but the bill doesn’t seem to be predicated on that changing fact of life. So there’s no real effort in the legislation to imagine what a postal service of the 21st century should do. Instead what we get is some spackle and some patches and some tape in order to keep the current organization moving forward.”

Kosar adds the legislation is pretty much a duplicate of reforms passed in the last Congress. He also has concerns with how the bill will allow the postal service to increase the price of first-class mail instead of finding more innovative solutions to budget issues. The Taxpayers Protection Alliance (TPA) argues the bill fails to address issues with management.

“Congress has failed to offer meaningful legislation that will provide the real systemic reforms,” TPA said in a statement provided to InsideSources. “Lawmakers need to thoroughly evaluate the costs associated with all services the USPS is attempting to provide. For too long the USPS has lost sight of its core mission to deliver letter mail and this bill is nothing more than a taxpayer-funded bailout of an agency swimming in over $100 billion of debt because of poor business management.”

The USPS has contested for a while that retiree benefits are the bigger problem. It released a report last year citing increased labor costs, retirement benefits, and a lack of statutory flexibility as areas of concern. It didn’t mention management issues, which critics have rejected.

The postal service has also faced criticism in recent years for attempts to expand its services beyond mail delivery even as first-class mail delivery has slowed. According to an internal survey of postal employees obtained by InsideSources last year, the organization’s workforce is deeply dissatisfied with the direction of the organization.

“I think the number of goals that the postal service should achieve needs to be reduced,” Kosar said. “It’s certainly good for government agencies to figure out new ways to do things. Where I would be cautious, however, is you don’t want to start making up new jobs for a government agency to do, just to give it more to do in the hopes it will get revenue.”

The earlier postal service report notes worker compensation has increased by $922 million while benefits went up an additional $1.2 billion. The postal service reported a net loss of $5.1 billion for fiscal year 2015. It also reported a $5.5 billion loss in the year before that.

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