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Archive for December, 2010|Monthly archive page

Base Postal Reforms on Facts, Not Fiction

In Uncategorized on December 16, 2010 at 4:19 pm

There is a possibility that certain critical reforms of the USPS could take place in the Congressional Lame Duck Session now underway. Senator Collins, a longtime champion of our industry’s concerns, introduced legislation that would achieve major fixes we’ve sought for years including Priority One: Fix pre-funding and refund the billions associated with retiree health and pension overpayments. Now more than ever, discussion of Postal “Distress” needs to focus on facts — not the fiction in “common wisdom.”


Debunking 4 Common Myths About the US Postal Service



“Everyone is entitled to his own opinion, but not his own facts.” — Daniel Patrick Moynihan



The Post Office takes a lot of heat, especially when it asks for a rate increase. Some of the criticism is well deserved, but some of it is not. The institution dates back to our Nation’s founding and still touches our lives on a daily basis. It helps fuel billions in hometown commerce, and remains the last mile lifeline to durable communication across the land.


While the USPS consistently scores the highest favorability marks across federal agencies, fundamental misunderstandings persist about its operations.


We objected to the recent Postal Service request for an emergency rate hike. In our view, it was neither justified nor a long-term solution to serious problems facing the vital institution. Real and comprehensive reforms are needed, and those will take Congressional action. But for Congress to finally act to empower the USPS to help itself, we will need a constructive debate grounded in facts — and not the common myths we hear repeated over and again:


Myth One: The US Postal Service Runs On Tax Dollars.


Reality: This is utterly false. Postage — stamps and receipts from mailers — fund the USPS. It is entirely self-sustaining, and not at all reliant on taxpayers. Any comments about “wasting taxpayer dollars” are a distraction: It runs like a business, but still needs more freedom to run even more like a business.


Myth Two: The US Postal Service Is Doing Nothing to Cut Operating Costs


Reality: Simply not true. The Postal Service has taken big steps on both the labor and facilities fronts. It needs to build on that progress, but give credit where due. The USPS has reduced its career employment from 787,000 positions to about 584,000 today, closed and merged operations, and reduced costs by more than $20 billion during the last 10 years for a cumulative savings exceeding $50 billion.


Myth Three: So-called “Junk Mail” Loses Money for USPS


Reality: Just the opposite. Without advertising mail, the Postal Service would not have sufficient business to support its infrastructure and to continue to provide delivery services to an ever-growing network of delivery stops.  Many types of advertising mail are actually large profit centers for the Postal Service.  One category, called Saturation Mail, is used by free community papers, shared mailers, and coupon envelope companies, and pays one of the highest mark ups in the system – almost 240% of the actual cost to deliver.


Myth Four: Volume Declines are the Only Reason for the Postal Budget Crisis


Reality: Not true. If not for massive health care pre-funding requirements — a mandate not required of any other government or private entity — the USPS would not be facing the current deficit projections. The Postal Service would actually be breaking even — even in these tough economic times — if it were not required to completely prefund the costs of all retire health benefits (more than $5 billion a year) at the same time it is paying current retiree health benefits.  These annual payments are approximately $7 billion – essentially the same amount as published Postal Service loses.  Making matters worse, the USPS — and in turn postal ratepayers — is actually owed anywhere from $50 billion to $140 billion from the Federal Treasury for historic overcharges relating to retiree pension costs. These stunning figures can be found in reports issued by the Office of Inspector General and in an independent study commissioned by the Postal Regulatory Commission, but are too often missing in media coverage.



America needs a healthy, self-sustaining Postal Service. The USPS has taken significant steps towards operating as the efficient enterprise it needs to be. But it remains hampered in its efforts by legal constraints that can only be fixed by Congress. In order for it to fully tackle labor and facilities challenges — as well as obtain relief from unjust burdens and refunds for historic overpayments relating to retiree health and pension — comprehensive reform will need to be passed. And for that to happen, the debate will need to be shaped by facts — and not the most common myths about the United States Postal Service.