How Not To Fix The Post Office

Among the many bills passed by the 109th Congress in its waning hours was the latest version of their continuing efforts to “reform” the United States Postal Service:

The legislation would replace the lengthy and litigious process used to raise the price of stamps and some other postal rates with a price cap, limiting rate increases to the rate of inflation for a 10-year period. The change would inject more predictability into postal increases, especially for the magazine industry and other large mailers. It also would permit the Postal Service to more quickly offer discounts for its services, such as promotional rates to attract business in holiday seasons.

The Postal Service also gets billions of dollars in financial relief under the bill. Costs for military pensions earned by postal workers during their time in the armed forces would be shifted from the Postal Service to the Treasury, the practice for most federal agencies. The bill also would release money from an escrow fund to cover postal retiree health-care liabilities.

The legislation would replace a rate-review commission with a more powerful Postal Regulatory Commission, which could set some postal rates and examine postal financial management practices.

In other words, more regulation, not less. And guaranteed rate increases for a decade to boot.This is what Congress calls reform and they actually think it will help:

Sen. Susan Collins (R-Maine), a chief sponsor, called the bill “great news for the future of an institution that is critical to our economy and will ensure the continuation of universal postal service at an affordable rate

If you really want to fix the Postal Service, Senator, here’s what you need to do:

  • Eliminate the USPS monopoly on first class and all other mail. Allow FedEx, UPS, DHL, and anyone else who wants to get into the game to deliver first class mail, magazines, or anything else to do so. In the long run, it will result in better service, more competitive pricing, and more innovation
  • Eliminate the regulations that require the USPS to deliver first class mail at a uniform rate. It makes no sense that it costs the same to mail a letter from New York to Boston as it does to mail it from New York to Honolulu. Let the market decide how to price these services.
  • Get the government out of the business of providing pensions to Postal Workers. We don’t do it for the guys who work for Ford and General Motors, there’s no reason we should do it for the guys who deliver the mail.

All of this, and more, has been proposed before but Congress continues to try the same old solutions that never seem to work.

  • John Newman

    I’m with you Doug, but Congress will not allow competition. Look at what happened last time it was tried:

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  • VRB

    Isn’t the government, the Postal workers employer? If it is, why would they be the to provide pensions.
    Do you mean that no company should provide any pension plan? I have no idea what Ford or General Motors does.

  • VRB

    …why shouldn’t they provide pensions?

    I wish there was a preview comments. As you can see, even though I reread before I submitted the comment, my mind stayed blank.

  • Eric

    The US Postal Service is a corporation wholly owned by the Federal government. It is required to be self funded. In recent years the USPS has actually managed to not require any tax subsidies (although there are other indirect subsidies involved). If the USPS is required to continue to fund all pensions and military credits, as it is now, a rate hike will be coming in the near future. Mass mailers will be impacted by this. By transferring the incurred liability for military service to the Treasury, these rate hikes will be delayed. This is the real impetus for this recommendation.

    Two bad things here. First, taxpayers will be partially providing direct subsidy to the USPS again. Second, mass mailers will be getting taxpayer assistance to keep their rates low. This is par for the course in our current government, of course.

    Now, to answer VRB. The issue is not whether postal employees should have pensions, or not. The issue is whether mail services should be provided in a free market, or not. .