Still Inefficient, Mismanaged and Free-spending

Op Ed Published in the Orange County (CA) Register

The prospect of a stamp price increase hangs over us once again, but the U.S. Postal Service, Congress and the White House seem more interested in pointing fingers at each other than helping ordinary people who will be lumped with the cost.

Early next year, the Postal Service is expected to seek approval for a rate hike of 10 percent to 15 percent, which would push stamp prices to at least 41 cents. First-class stamps have already gone up by 12 percent since early 2001.

Despite new technology – like modern reader/sorters that process over 30,000 pieces of mail per hour – stamp prices have risen with inflation since 1970. This is unacceptable. “The doubling of overall volume coupled with scale economies should have resulted in the average price of the stamp dropping in real terms,” according to a December study by leading experts of the Postal Rate Commission.

So why must USPS ask consumers to take a blow once again? USPS blames Congress for failing to pass postal reform legislation that would have helped an organization plagued by stagnant revenue, rising costs and declining first-class mail volume.

In 2004, reform bills won unanimous approval at the committee level in both houses of Congress. But the legislation never passed because critical disputes between the White House and USPS weren’t resolved.

Probably the biggest sticking point is over what to do with about $3 billion in annual savings that resulted last year when Congress allowed the Postal Service to scale back its payments into overfunded pension accounts.

The USPS wants access to the savings, but Congress required that the money be deposited in a federal piggy bank as a curb on USPS’ wasteful spending. The White House opposes giving the money back to USPS because that would make the federal deficit look larger.

While the White House wants to make the deficit look smaller, the USPS wants an excuse to burn through an extra $3 billion per year. Meanwhile, there’s no follow through on serious reform.

While these government parties can’t resolve a spat over who pays for what, they are perfectly happy to pass the cost off to American consumers. The USPS has over $70 billion in unfunded liabilities. And ultimately, the people stuck with the bill will be taxpayers – whether those taxes are levied in the form of a stamp-price increase or an income tax.

As for what ought to be done to save the mail, the 2003 report of the President’s Commission on the USPS remains our best guide. It makes 35 recommendations, many of which don’t require new laws at all, just policy changes at USPS.

The recommendations include two related to pensions as well as 33 common- sense proposals to do such things as shutting down underused facilities and eliminating redundant management jobs.

In the end, the Postal Service’s basic problems are the same as they have been for years: inefficiency, murky accounting and out-of-control spending.

These areas are in dire need of repair, no matter which set of books the pension money is beefing up. Instead of pointing fingers and hiking prices, the Postal Service and the White House should both get serious about reform.