Postal Commission Getting Some Sound Advice For Change

Issue Brief

With one-third of its available study time consumed, the Presidential Postal Commission has heard some sound advice on how to change the Post Office to limit future risk of failure. But it remains unclear if this advice is being heard above the misleading rhetoric of some stakeholders.

Among the most significant suggestions to date:

1. The nine-member Board of Governors should be replaced with a Board of Directors with responsibilities and authority similar to those of private sector firms. An alternative to Presidential appointment should be considered, with attention to required qualifications.

2. The powers of the Postal Rate Commission should be expanded to include subpoena power and the power to review the continuing need for the postal monopoly.

3. These expanded powers and responsibilities should include questions of the appropriateness of cost levels in projections and budgets, especially those that determine rate increases.

With a strong Board of Directors providing better business direction, the Postal Service could avoid wasteful spending on the promotion of activities outside the expertise of its management – such as expedited delivery services and e-commerce. Granting subpoena power to the Rate Commission would avoid the stonewalling tactics resorted to by Postal Service management when it has disagreed with the Commission in the past. One egregious example of this is that the Postal Service still has yet to develop data requested by the Rate Commission following its ruling in the mid-1980s to attribute carriers’ street delivery time based on the class of mail volumes delivered. The requested data would improve these attributions.

Likewise, reconsidering the arrangement that currently gives the postal Board of Governors exclusive authority to define the parameters of the letter mail monopoly — by its authority to define what is and what is not a ‘letter’ — could greatly enhance the prospects for greater competition in the provision of mail services.

For its part, Postal Service management has predictably advised against greater privatization, preferring to keep the dialogue focused on improving business practices. To this end, the Postmaster General should be required to make public annually the Service’s expected productivity improvements and plans for postage rate increases over a planning horizon of at least five years. To track progress towards these plans, the USPS should be required to implement transparent and forthright financial and performance reporting systems, as repeatedly proposed by the General Accounting Office.

Charles Guy, Ph.D., is Adjunct Fellow with the Lexington Institute and former Director, Office of Economics, Strategic Planning, U.S. Postal Service.