NEWS

Debt-plagued U.S. Postal Service eyes bipartisan bill to solve woes

Ryan W. Miller
USA TODAY
U.S. Postal Service mailbox

One of its stamps lasts forever, but the future of the U.S. Postal Service? Less clear.

The "Forever" stamp turns 10 years old in March. That's about how long the postal service has faced declining mail volumes and a growing mountain of debt. Mail volume is now at a 29-year low, and for the past 10 years, USPS recorded annual losses as high as $15.9 billion. Last year, it tallied a $5.6 billion loss.

The beleaguered service, its regulatory agency and members of Congress hope 2017 will mark a turning point.

The postal service operates under a 2006 law that governs what it can charge for stamps, how much it must pay into retiree health funds and how it operates its business. Some provisions of the law expired last year, including the provision that forced the postal service to pay a staggering $5.4 billion to $5.8 billion annually to the health fund.

Now the House is considering a bipartisan bill that would revamp that costly health plan and could lead to an increase in stamp prices – moves lawmakers say could help USPS thrive.

"Once enacted, and together with aggressive management actions, the Postal Service can meet all of our obligations and continue to improve the way we serve the American public," Postmaster General Megan Brennan said in a recent testimony to Congress.

Congress imposed the health fund requirement over concerns the postal service wouldn't be able to pay its retirement obligations and that cost would fall to taxpayers, said Cornell Professor R. Richard Geddes, an expert on the postal service.

That measure also capped prices at the rate of inflation for services that make up 74% of the postal service's revenue, like First Class mail, giving USPS little flexibility to respond to changes in the marketplace.

With the advent of email, texting, online bill paying and social media, consumers found they hardly needed paper, pens and stamps to send an invitation or thank you note. The Great Recession only made matters worse, and mail volume has declined 36% since 2007.

The result: The post office started missing all annual payments to its retiree health benefit fund in 2011 and maxed out its credit, hitting a $15 billion borrowing limit.

Rep. Jason Chaffetz, R-Utah, one of the new bill's cosponsors, said rising debt and missed payments were "a flashing red light" for legislators to step in. "We have to change that equation, or you’re going to see a need for a massive bail out," he said.

Without reform, "This iconic American institution would continue its downward spiral to insolvency," said Rep. Gerry Connolly, D-Va., another cosponsor.

With the easing of the 2006 law, the postal service now has less stringent requirements to pay into its retiree health program, but it still owes an additional $52 billion to the fund. The proposed legislation would further lessen the amount the USPS has to pay for these benefits by creating separate plans for postal employees within existing federal employee health care programs and integrating Medicare into its retiree programs.

The measure would also raise stamp prices by 1 cent and allow the Postal Regulatory Commission to consider giving the postal service more flexibility to set its prices.

"It's important to put out the financial fire first," said Robert Taub, chairman of the Postal Regulatory Commission, who praised the proposed bill. The postal service will need more legislation to address long-term problems, including possible changes to the postal service’s mandate to delivery to every address six days a week, he added.

Not everyone thinks the measure, if passed, would cure all USPS' woes.

"We don’t think it really addresses the fundamental problems of the postal service," such as poor management, said David Williams, president of the Taxpayers Protection Alliance, which aims to hold public officials and agencies accountable on government debt. "We don’t see it as changing the culture."

With USPS the sole provider of stamps, Williams is concerned the agency could increase First Class mail costs as a way to cut prices on package delivery service and beat out competitors like UPS and FedEx.

Instead, Williams said the postal service should be given more authority to act like a private company without so much Congressional oversight on business decisions, like the number of delivery days.

Geddes, the Cornell professor, said allowing more control over pricing and delivery days and promoting technological advancements could aid the struggling agency. European and Australian postal services have taken similar steps, and it made them more adept at handling challenges to postal delivery in the digital age, he added.

"Electronic communication technology is going to continue to evolve, and it’s going to be more and more important that the postal service be allowed to innovate and compete," Geddes said.

Follow Ryan Miller on Twitter @MILLERdfillmore