USPS responds to blog

Once again, Brian McNicoll misleads readers of about efforts to return the U.S. Postal Service to financial stability. Surprisingly, the conservative commentator takes issue with a bill that would cut billions of dollars in federal spending and require a federal entity to follow private-sector best practices.

The Congressional Budget Office (CBO) actually gave the postal reform legislation (H.R. 756) a positive score. The CBO estimates it will achieve $6 billion in savings for the federal government on a unified basis. While it’s true that the bill would increase spending by the Medicare trust fund, other savings to the government essentially counteract the effect on Medicare when considering the on-budget impact.

Contrary to what Mr. McNicoll would have you believe, the Postal Accountability and Enhancement Act of 2006 did not give the Postal Service “real control” over its fate. For instance, the 2006 law created an austere price cap that restricted the Postal Service’s ability to adjust prices of products that generate over 70 percent of our revenue. The current cap does not take changes in Postal Service volumes and costs into account, and hence is wholly unsuitable to ensuring the Postal Service’s continued ability to provide prompt and reliable universal services in a self-sufficient manner. Without legislative and regulatory reform, our net losses will continue and our financial position will worsen — threatening our ability to meet America’s evolving mailing and shipping needs.

It’s also important to understand that the Postal Service did not choose its current pension and health care systems — they are the result of a federal statute. Because of declining mail volumes, the current pension and health care systems and unique pre-funding requirements imposed by Congress are unaffordable, and that’s the reason the Postal Service has defaulted on the huge prefunding payments.

The retiree healthcare provisions of H.R. 756 align with private sector best practices, in terms of Medicare integration and calculating our pension benefits on the basis of the postal population alone, as opposed to the entire government. In this regard, no rational business providing retiree health benefits would choose not to integrate with Medicare, nor is it rational to calculate our pension liabilities on the basis of individuals who haven’t worked for us.

The Postal Service is not shirking its responsibilities in this regard, nor does it seek any kind of bailout. What the Postal Service requires is real and lasting reform that ensures its retiree health benefits program is affordable to protect against any risk that those benefits cannot be funded going forward. Indeed, among the commercial and governmental entities that offer and fund health benefits for their retired employees (an ever-shrinking pool), virtually every one fully integrates with Medicare. The substantial cost savings associated with this simple reform would put the Postal Service on sounder financial footing going forward.

Studies consistently show that the U.S. Postal Service is one of the most efficient posts in the world. Moreover, the Postal Service is self-funded and postal operations are paid for with proceeds from the sale of postal products and services — not tax revenue. As for all the “advantages” McNicoll says the Postal Service enjoys because of its status, the Federal Trade Commission concluded that the Postal Service actually experiences a significant net burden as the result of the responsibilities that we undertake as a part of the United States government. Nevertheless, they are responsibilities we are proud to fulfill.

The Postal Service’s financial situation is serious but solvable. Continued innovation and aggressive management actions together with the passage of the provisions of H.R. 756 into law and a favorable outcome in the Postal Regulatory Commission’s 10-year review of the Postal Service’s pricing system will restore the organization to financial stability and allow us to continue to provide excellent service to the American public.

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