President Trump releases plan proposing Postal Privatization

June 21, 2018

Restructure the Postal Service United States Postal Service

Summary of Proposal: This proposal would restructure the United States Postal System to return it to a sustainable business model or prepare it for future conversion from a Government agency into a privately-held corporation. Like many European nations, the United States could privatize its postal operator while maintaining strong regulatory oversight to ensure fair competition and reasonable prices for customers. The President’s Task Force on the United States Postal System will make recommendations on reforms towards this goal in August 2018.

THE CHALLENGE When the United States Postal Service (USPS) was created out of the Post Office Department in 1970, the Congress tasked it with binding the Nation together through correspondence; half a century later, that role has been increasingly supplanted by less expensive digital alternatives. USPS has extremely high fixed costs as a result of relatively generous employee benefits combined with a universal service obligation that is understood to require mail carriers to visit over 150 million addresses six days per week. Historically, this level of service was supported by a high volume of mail. Despite significant decline in volume in the internet age, the size of the delivery network has continued to grow to meet expectations of the current operating structure. USPS can no longer support the obligations created by its enormous infrastructure and personnel requirements. USPS already has over $100 billion in unfunded liabilities, a substantial capital investment backlog, has posted losses for over a decade, and has no clear path to profitability without reform. A new model that adequately finances USPS while meeting the needs of rural and urban communities, large mailers, and small businesses is needed.

THE OPPORTUNITY A privatized Postal Service would have a substantially lower cost structure, be able to adapt to changing customer needs and make business decisions free from political interference, and have access to private capital markets to fund operational improvements without burdening taxpayers. The private operation would be incentivized to innovate and improve services to Americans in every community.

WHAT WE’RE PROPOSING AND WHY IT’S THE RIGHT THING TO DO This proposal would restructure USPS by aligning revenues and expenses to restore a sustainable business model and possibly prepare it for future conversion from a Government agency into a privately-held corporation. Like many European nations, the United States could privatize its postal operator while maintaining strong regulatory oversight to ensure fair competition and reasonable prices for customers. A private Postal Service with independence from congressional mandates could more flexibly manage the decline of First-Class mail while continuing to provide needed services to American communities.

In 2017, USPS experienced faster than expected declines in both First-Class Mail and Marketing Mail. First-Class Mail has declined 40 percent since 2001. Marketing mail is more stable, down only 10 percent since 2001, but is incredibly sensitive to price and market downturns. At the same time, USPS has continued to grow its package delivery business, particularly the last-mile delivery that is relatively cheaper for them because of the huge fixed network they must maintain to support mail delivery.

However, the revenues from lower-margin package delivery and other competitive products cannot replace declining revenue from the market-dominant (monopoly) products in the long-run. This year, USPS continued its six-year string of defaults and for the first time defaulted on pension-related payments rather than just health benefit prepayments. USPS’s current model is unsustainable.

Major changes are needed in how the Postal Service is financed and the level of service Americans should expect from their universal service operator. One successful model of Postal reform internationally has been to transition to a model of private management and private or shared ownership.

USPS is caught between a mandate to operate like a business but with the expenses and political oversight of a public agency. A private postal operator that delivers mail fewer days per week and to more central locations (not door delivery) would operate at substantially lower costs. A private entity would also have greater ability to adjust product pricing in response to changes in demand or operating costs.

Freeing USPS to more fully negotiate pay and benefits rather than prescribing participation in costly Federal personnel benefit programs, and allowing it to follow private sector practices in compensation and labor relations, could further reduce costs. A privatized Postal Service could be structured like an investor-owned utility and continue to be regulated by the Postal Regulatory Commission (PRC), a successor agency, or another Federal regulator such as the Federal Trade Commission, consistent with the existing models of privatization in Europe.

Even with continued regulation, a privatized Postal Service would be more insulated from politics and more likely to succeed as a financially-viable business. A private entity would also have access to private capital markets to raise money for needed improvements like new vehicles without burdening taxpayers with additional liabilities. USPS privatization through an initial public offering (IPO) or sale to another entity would require the implementation of significant reforms prior to sale to show a possible path to profitability.

Most foreign posts that have been privatized have been profitable at the time of the sale. In contrast, USPS has lost over $65 billion since the last recession and recorded a $2.7 billion loss last fiscal year. To reach profitability, most international postal operations have gone through significant restructuring, including shrinking their physical and personnel footprints. In some cases, foreign governments have had to absorb legacy retirement liabilities1 in order to prepare a postal operator for sale.

The existing unfunded liabilities in USPS’s retirement programs total more than $100 billion. USPS owes an additional $15 billion to Treasury’s Federal Financing Bank and has further liabilities to the Department of Labor’s Workers Compensation program. According to the Postal Service’s own estimates, the Agency is insolvent, with liabilities exceeding assets by more than $120 billion.

To address these major issues and identify solutions, possibly including private ownership, the President has issued Executive Order 13829: Task Force on the United States Postal System.

The Task Force will conduct a thorough evaluation of the operations and finances of the Postal Service and make recommendations for reform consistent with this reorganization proposal. The Task Force will examine:

1. The expansion and pricing of the package delivery market and the USPS’s role in competitive markets;

2. The decline in mail volume and its implications for USPS self-financing and the USPS monopoly over letter delivery and mailboxes;

3. The definition of the ‘‘universal service obligation’’ in light of changes in technology, e-commerce, marketing practices, and customer needs;

4. The USPS role in the U.S. economy and in rural areas, communities, and small towns; and

5. The state of the USPS business model, workforce, operations, costs, and pricing.

The recommendations will include administrative and legislative reforms to the United States postal system that promote our Nation’s commerce and communication without shifting additional costs to taxpayers. The report will be available by August 10, 2018.

SIGN UP FOR OUR POSTAL NEWS BLAST!


Get the news sent straight to your inbox. Please remember, this list sends an email every weekday, so if you are not a news junkie, then this might not be the list for you. Thanks

Thank you for subscribing.

Something went wrong.

51
Join the Conversation

22 Comment threads
29 Thread replies
1 Followers
 
Most reacted comment
Hottest comment thread
43 Comment authors
  Subscribe  
newest oldest most voted
Notify of
David wulf

the best thing to do is for the government to just say to the usps….we are no longer involved with you you’re on your own. and return the money they stole from the postal service some years back.

Jsher

End the $5 BILLION subsidy to Congress started by W.Bush back in approx.2000 and return the billions Congress has self mandated the USPS using it like a cash-cow.

Barbara

AGREED !!

Henrietta McClellan

Agreed!

RRR

How about we make the postal service private – what do we have to lose. It already losing money ever quarter, it has too many over paid DO NOTHING supervisors and the PMG talks shit.

Hector Arroyo

Cut out all management that has no skills,degrees in management,accounting or in any other level, like customer service,and are highly paid.You have PM,managers,supervisors getting paid high salaries and at the same time you have employees that know about management and customer service more than they do.Many PM are just a figure in a post office that has no need for them.

Bubba

What might fix it is this! Rural carrier routes are evaluated by amount of mail, amount of dismounts, # of accountable, miles driven etc. Each route is then paid a certain amount annually. My experience is that rural carriers deliver more mail faster than most city carriers who are paid hourly. You want to make more $? Bid a route that is bigger and pays more. Many days rural carriers are back to the office, done with their work day, by 2:30 or so, but they get paid the same. On heavy mail days they are out way past 8… Read more »

Roger Lodge

A 204b starts at 50k. What is the pay of a step O carrier? Over 60k. And usually those carriers end up costing the PO more because at that point they are usually giving up an hour or more on their routes and that’s overtime to another carrier. So before you go talking shit about management, how about we clean out the useless step O and see where the balance sheet is at.

Tim Major

Please… as a Canadian Postal worker i don’t know 204b or step O…but it sounds like step O is a carrier with seniority, and therefore increased benefits over time…how about they make the routes more manageable for all concerned… thus, you increase the workforce and have a bigger pool of workers to adequately cover for absences or overworked situations? That solves a lot of problems in of itself, doesn’t it?

Rik

That is no true..post office makes profit of almost $800 year…Bush passed law requiring USPS to pretend pension 75 years in future for employees that haven’t even been born yet so that it would appear to be losing money..so someone like Chump could try to privatize it and bust up a large union that employs more vets than any other company in world

smith

dont cut off your nose to spite your face

Bradford Benjamin

Name one BUSINESS in the WORLD that has to PRE-FUND FUTURE EMPLOYEES, 75 years in ADVANCE! republicans passed this back in 2006 in order to PRIVATIZE the PO. TRUTH!

smith

yep that has been the long term plot all along!!

Lori

I totally agree on makes 80.000.00 a year and clerks do all the work

Charlie

Most of the postmasters level 18 are making 84,000 dollars. They are glorified clerks. Nobody should be making that much without a college degree and that is not needed in the USPS. We need more workers.

Ralph

its like $15/hr to walk around delivering mail on foot idk what you’re on. Maybe wages get better over time but they don’t start at 80k

Andrew Breining

Carriers do all the work 😎

Natalie

That would me mail handlers

Robert Kimbro

It’s losing money because Congress requires it to fully fund retirement for all employees. This was an earlier attempt to make the P.O. go away.

A Postal Carrier

No, its losing money because of all the unnecessary people in “middle management” making bad decisions.

Diane

No, Robert is correct. Learn about what repubs did to your employer. No other agency has to up front years of premiums for pensions AND health insurance.

Loma H. Frakes

Paid 75 years in advance, what private company would do that, what other Government is required to do that NONE !

Retired Postal employee.

Barbara

No more regulations by a govt that does not give them a dime of support but keeps taking away !! Let the PO run their own business, doesn’t have to be privatized, (that just causes prices to inflate for profit). it ran fine before the govt stepped in,, they have to do better than the govt is at running theirs ! This is not a slam on the POTUS, just what has happened at USPS for many years ! Step back, quit stealing their profits with the bogus funding, and let them run their business ~ maybe then a PM… Read more »

Tim Major

Precisely, Barbara!! Excellent comment!!

Mariana frattura

USPS. Trump the S stands for SERVICE!!! Not system.
U dope!!!! God help us.

Hardworks

How about the government stop taking money from the post office to pay for their Bill’s they can’t pay for. Then they will see a change in numbers n profit. By changing the system you will screw alot of hard working people out of their pension. There are some people that have been there for 35 to 40 years. Their bodies are giving out because of the hard work they have done and you want to take that away. I think not. It will be a cold day in hell before Florida Postal workers will allow that!

Tim Major

Excellent comments, posties!!

Mariana frattura

I wonder if anyone realized that the USPS subsidized all military pnsions for years. Thus ended under George W.Bush.

Silvia Tineo-Perez

Get your hands out of the Post Office Trump.

David

There are many holes in this proposal. It was written to make the service look bad. The Postal Service has zero burden on the taxpayer. It’s weighed down by having to pre fund its retirement system 75 years into the future, those people aren’t even born yet. Tell me what other agency is required to do that? It’s set up for failure so that private industry vultures can swoop in and cash grab. Don’t be fooled by this newest attempt to tear this cash cow limb from limb…

Donald

I completely agree!

Cody Hatfield

This is utter crap – the USPS does just fine whenever y’all stop trying to mess with it. Stop trying to privatize all of our public services – y’all keep claiming they “do the job better and cheaper”, but what they really do is pay their workers next to nothing, and then rely on the government to still provide all the benefits for the workers.

Walmart does this – their employees are one of the largest recipient groups of SNAP benefits (food stamps), which they in turn use at Walmart because its the cheapest place for them to shop.

Nancy Schimmel

Can anyone explain to me why the Post Office has to show a profit when the Pentagon doesn’t even have to show where they put their money? They lose track of trillions. https://www.forbes.com/sites/kotlikoff/2017/12/08/has-our-government-spent-21-trillion-of-our-money-without-telling-us/#41b3e5337aef

Richard

You have hit the nail on the head. The main problem I see from this happening who would have an over site of the Postal service. I would not work well with corporations intermingling with out regulation. How could we trust these businesses to deliver on time as we have not. I don’t trust corporations all that much.

Tim Major

precisely Richard! Canada Post has done this very thing for a long time now and it shows!! It shows in service, it shows in the responsibility of the service to the public that it was created to address!! Solidarity across borders!!

Jack Butler

Step One: Amend the Constitution to the United States of America, because the US Postal Service is mandated by that document and cannot legally be privatized.

Step Two: When Step One fails, call Trump a moron, point at his face, and laugh.

Jim

The Post Office was mandated in your much vaulted Constitution, and looses money because they were made to prefund their retirement trust for years in advance, by conservatives to break it.

mark woolard

Since Americans don’t save enough money how about letting the post office set up savings accounts as is done in Europe for people that banks don’t want as customers? The banks always screw small accounts and postal savings accounts would be wonderful benefit for the average citizen.

smith

that is exactly what the po used to do back in the 40s and 50s one problem we have is that some of the top level folks in the po are republican capitalist themselves and like this idea

Send this to a friend