Translating Predictions of Postal Privatization - Part II

The following is the second in a two-part commentary, excerpted from the Jan. 6 edition of Mailers Hub News, in response to the Fortune Magazine article on Dec. 27, USPS Could Privatize As Early As Next Year

Any decision to sell-off or otherwise privatize the USPS would not be something arising from the Postmaster General, so campaigning that he or she should protect the ramparts of L’Enfant Plaza against the huns of privatization is somewhat misguided.

As Pat Donahoe learned several years ago, the USPS can’t even decide the frequency of delivery on its own; Congress (read: politicians) makes the big decisions. So, contrary to the APWU’s version, any major changes to the Postal Service’s business model, if not originating from, at least would need to be supported by the White House and a majority in Congress. And given the union’s large cadre of friends on the Hill, Dimondstein’s fretting is unnecessary dramatics.

 

After a brief discussion of the shifting package business as Amazon and others insource more volume once given to the USPS, the article continued:

“Still, something must give. The search for new leadership comes as the Postal Service marks its 13th straight year of losses (the USPS had a net loss of $8.8 billion in fiscal year 2019 despite a $514 million increase in operating revenue) and is on track to run out of cash by 2024.

“That’s because unlike almost every other federal agency, the USPS is required to pre-fund health care for all of its retirees, which, Brennan told Congress, accounts for 80% of the agency’s losses. Brennan pushed for Congress to end the mandate, and key unions and labor groups have backed her in her efforts.

“While the Postal Service is a federally run agency, it is considered financially independent and hasn’t received any taxpayer money for more than 30 years. The agency relies on sales of stamps, services, and other products to fund itself.

“Still, Congress has ultimate control over the agency’s finances: It decides how much postage and services cost and can institute structural and financial reform or bail out the agency.

“Brennan announced her imminent retirement in October after serving in the top role for five years. She had urged Congress to help fix the Postal Service’s business model and submitted a draft of a 10-year economic plan to the House Oversight and Reform Committee’s Subcommittee on Government Operations earlier this summer, but her efforts did not have much of an impact. Brennan, who was appointed during Obama’s presidency, was reportedly pressured out of the agency by Trump, though she denied those allegations.”

 

Again, to clarify:

The general statements about the Postal Service’s FY 2019 losses are close enough, but the forecast for being out of cash by 2024 omitted several explanatory asterisks normally attached by the USPS.

In addition, although the money is a mere blip on its finances, technically the USPS still receives taxpayer money as annual appropriations to compensate for free matter for the blind and overseas voting materials. That line in appropriations bills is where Congress attaches its mandate for six-day delivery and bans closing unprofitable post offices.

The USPS also is due a $29 million payment annually under a 1993 law that’s supposed to pay back past losses on preferred rates, but Congress has a way of deferring or simply overlooking that IOU.

Perhaps the most egregious error is the statement that Congress “decides how much postage and services cost.” It got out of the rate-setting business in 1970 so, apparently, the article’s author missed school the day the roles of the USPS Governors and the Postal Regulatory Commission in the rate-setting process were discussed. Fortune’s fact-checker apparently was out that day as well.

 

As for the allegation that Megan Brennan was “pressured out” by the president, only she knows what really happened, and she’s too astute to comment – at least until after her retirement is official at the end of the month*. There was a flurry of publicized carping from the White House about unfair postage prices for parcels being mailed in from China, and the presumed low prices being paid by Amazon for its shipments. Changes in the international postage scheme will be taking effect in July, and Amazon is jilting the USPS in favor of delivering its own parcels, so both issues are moot. Besides, the postal community knew well that any “blame” for either that was dropped at Brennan’s doorstep had landed in the wrong place.

 

She agreed to a five-year term as PMG when she took the job, and it’s up this month; that’s likely all there is to that.

*Shortly after the publication of this article in Mailers Hub News, the USPS announced that Megan had agreed to delay her retirement in order to facilitate the search for her successor. 


If you enjoyed this installment of Leo's commentary, log into the Mailers Hub News archives to read this article in its entirety and many others.

 

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