Why the Postal Service Is Not Subsidizing Package Delivery

The Information Technology and Innovation Foundation (itif.org) has just released a report rebutting claims that the Postal Service is charging too little for package delivery and that package delivery is being cross-subsidized by market-dominant products.  The Report is by ITIF founder and president, Robert D. Atkinson, an internationally recognized scholar and a widely published author whom The New Republic has named one of the “three most important thinkers about innovation.”

Here’s the Report Summary:

As the volume of traditional mail continues to decline and as e-commerce grows, the importance of package shipping to the U.S. Postal Service (USPS) will only increase. Yet, because USPS operates two lines of business – the traditional monopoly business (e.g., first class mail) and the competitive businesses, including packages – it is critical that USPS fairly prices package shipments.  Some, including President Trump, assert that USPS is subsidizing packages and unfairly competing with private package shippers. The facts show that USPS is competing fairly.

There are two central issues involved in the debate over whether the USPS is charging too little for package delivery. The first is whether USPS is abiding by the requirements in the 2006 Postal Accountability and Enhancement Act. On this issue the record is clear: USPS is abiding by the provisions in the statute. The Postal Regulatory Commission, whose job, among other things, is to regulate the prices USPS can charge for products that compete with the private sector, has found that USPS is abiding by the law and is not using its mail monopoly to unfairly subsidize package delivery.


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