Reforming the Postal Service: Finding a Viable Solution

TAKEAWAYS:

• Substantive and comprehensive legislative reform is urgently needed due to the deteriorating financial condition at USPS. Chairman Chaffetz announced plans to release a postal reform discussion draft in coming weeks.
• Lack of meaningful cost-cutting initiatives, aging delivery vehicles, and declining infrastructure contribute to the agency moving increasingly further away from financial solvency.
• According to Post Master General Brennan, requiring all postal service retirees to dually enroll in Medicare and federal employee health care plans would essentially eliminate $54 billion of USPS’s unfunded retiree health benefit liability.

PURPOSE:

• To examine the need for timely and comprehensive postal reform legislation.
• To hear from key stakeholders to better understand the specific provisions necessary for a comprehensive solution.

BACKGROUND:

• The United States Postal Service (USPS) faces significant and growing financial challenges. Mail volume declined more than 25 percent, or about 60 billion pieces of mail annually since 2006.
• In FY 2015, USPS reported a net loss of $5.1 billion, which represents the ninth consecutive year of net losses at the agency.
• From 2007-2015, USPS experienced a cumulative net loss of $56.8 billion.
• Since 2012, USPS has not made its annual $5.6 billion statutorily-required payments to the Retiree Health Benefit Fund.
• In addition, USPS has a combined pension funding shortfall of $24.1 billion.

KEY VIDEOS:

Chairman Jason Chaffetz (R-UT): “What you need to do is move volume. You’ve got to make the post office more relevant in people’s lives, so that there’s more volume that can move through the system. … [R]aising rates and cutting services is not the way we’re going to necessarily get there. ”

Government Operations Subcommittee Chairman Mark Meadows (R-NC): “Now, that [delayed mail] is not a funding problem, that is a management problem. … So, what we have to do is put this together and make sure that we have a service standard that doesn’t just increase costs…”

Rep. Blake Farenthold (R-TX): “As you cut the quality of your services, especially on your lead program or your lead product, first-class mail, it starts to become less valuable and makes email look like a better alternative.”