Deliver Reforms to the Troubled, Money-Losing Postal Service

Rep. Darrell Issa
San Francisco Examiner
06/28/2011

Unless Congress takes action now, the future of the United States Postal Service is in jeopardy. But if Congress will enact a sensible, sweeping reform of the Postal Service, we can protect taxpayers from another bailout and make it possible for USPS to implement a sustainable business plan for the future.

The problems facing USPS are many: declining mail volume, an aging fleet of delivery vehicles, an outdated brick-and-mortar retail network, the burden of honoring labor agreements that account for 80 percent of the USPS annual budget, and the absence of an efficient mechanism for addressing these crises. Together, these have accounted for more than $20 billion in aggregate deficits since 2007, and could mean losses in excess of $42 billion over the next four years, according to USPS’s own projections.

The primary challenge to USPS comes from the precipitous drop in mail volume that has accompanied the digital age.  Since 2000, when nearly 80 percent of household bill payments were made by mail, the number of homeowners shifting to forms of electronic payment has more than quadrupled.  At this rate, USPS now predicts that mail will drop an additional 30 percent off of a 2006 peak volume of 213 billion pieces. Given these numbers, USPS employs roughly 200,000 more workers than are needed to handle current mail volume.

Meanwhile, breakdowns in an aging fleet of 160,000 gasoline-powered and flex-fuel vehicles are now costing one-third of the total fleet maintenance budget — up 11 percentage points over USPS’s budget according to a report from the GAO released last month. The budgetary constraints USPS faces now seriously limit its ability to replace or refurbish thousands of vehicles approaching the final days of their expected 24-year utility.

When it comes to USPS’s outdated and expensive retail service model, Congress bears a considerable share of the blame. In the past three Congresses, no real effort was made to cut wasteful spending or close unneeded facilities. Given that the Postal Service has more retail facilities in the United States than Starbucks, McDonalds, 7-Eleven and UPS combined, it is past time to initiate a structured plan that aligns the number of retail facilities more closely with customer usage and profits.

Given the financial condition facing USPS, serious structural reforms are absolutely necessary, not only to protect the postal system but to protect taxpayers from another expensive bailout. The postal workforce must be reduced to a level that matches current mail volume through a combination of attrition, retirement and renegotiated union contracts.

Finally, Congress must establish a mechanism to prevent the sort of poor management and fiscal irresponsibility that has beset USPS’s transition into the digital age. A statutory controlling authority should be empowered to approve all budgets and make all major financial decisions whenever USPS defaults on any obligation to the federal government for more than 30 days.

Rep. Darrell Issa, R-Vista, is chairman of the House Committee on Oversight and Government Reform.