The Article Waiting to be Written

Commentary, by Leo Raymond

Any publication on any topic occasionally finds itself in the situation of knowing newsworthy events lie ahead but about which an article cannot be yet written; they just have to wait. Such is the situation in which we – and colleagues with their own newsletters – find ourselves.

One of the shoes to drop

One upcoming event that’s been anticipated since last spring is the release of the Postal Service’s ten-year plan. Presumed to contain the usual plea for Congress to act on legislative measures to help the agency’s balance sheet, the plan is unlikely to contain anything shocking. Rather, if the leaks that followed a Congressional briefing earlier this year are any indication, the plan will list cost-savings opportunities from changes in wage rates for new employees to adjustments to the scope and modes of delivery. On the revenue side, given the constraints the USPS faces about movement into new lines of business, the plan isn’t expected to propose anything to generate significant new income.

 

Some observers will fault the agency for a lack of innovation, for failing to optimize the use of negotiated service agreements, or for being too conservative in exercising the few business freedoms it’s alleged to have. Right or wrong, no one will know for sure what the plan presents until it’s released, and – based on comments by the PMG at the late August MTAC meeting – that won’t be until the newly seated governors have had a chance to review (and maybe revise) it. The next Board meeting is in October so no news about the plan should be expected until at least after that.

A shoe from the PRC

Meanwhile, the postal community continues to await the Postal Regulatory Commission’s issuance of its next (proposed or final) rule about changes to the rate-setting process. The commission began the required review of that process in 2016, and issued a report in late 2017 (followed by a proposed rule) that – staying within the lines of the PRC’s assignment – listed a series of steps that would enable over-CPI price increases and other pricing changes in an effort to fix postal finances through rates alone. After its proposals were met with a firestorm of criticism from the mailing community, the commission retreated. Given that over a year has passed since commissioners went back to the drawing board, and given that the panel now has three newly-seated members, observers have begun to anticipate a restart of the rulemaking. Presumably, that would be manifest by a redrawn proposal, though it’s unclear how any revision could hew to the letter of the PRC’s statutory mandate, stay within the limits of the actions that would be available to the commission, and also avoid another uprising from ratepayers and commercial mailers.

The biggest shoe

Of course, notwithstanding anything the USPS or PRC could or should do within their respective powers, the critical element in any scheme to right postal finances is legislative action. Proposals for postal reform redux have circulated for over a decade, with a variety of champions, but none has produced results. In part, these consistent failures have resulted from the concurrence of a tentative consensus among the major stakeholders (the USPS, the mailing community, and the postal unions) and fecklessness among legislators who are looking for someone to hand them a proposal that won’t require hard choices or unpopular decisions.

Most parties seem to agree about ending the prefunding obligation as it’s now prescribed, and many (though not all) support moving postal employees and retirees to full Medicare participation, but the list of agreed-upon items doesn’t go much farther.

The elephant in the room is, of course, the Universal Service Obligation – what it represents in terms of service and cost, but more importantly who’ll pay for it (postage revenue is rapidly becoming inadequate and public funding is politically unpopular). However, settling that question is, to most observers, fundamental before other issues can be tackled.

Congressional action on reform would be big news, but defining the nature and funding of the USO would be bigger. Given the absence of political will to do either, the article about them likely won’t be written anytime soon.


 

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