We Still Need Postal Reform

Today, The Wall Street Journal (subscription required) reported that the U.S. Postal Service will again raise the price on first-class postage stamps from 45 cents to 46 cents, consistent with its announcement in November. USPS will introduce a new first class global Forever stamp, which will cost $1.10 and allow mail to anywhere in the world, still valid with future rate increases.

USPS is self-financed, raising much of its revenue from postage. The Postal Service is prohibited from raising postage rate beyond adjustments for inflation, but with only a year since USPS last raised postage rates to adjust for inflation, it is a reminder of the tremendous financial challenges faced by the organization.

Postal reform is needed soon in this next Congress. The Postal Service has stated that it is currently losing $25 million per day and was not able to contribute $11.1 billion to the Treasury for employee retirement in this past year, overall recording a $15.9 billion loss. In the last Congress, the House passed a postal reform bill (H.R. 2309) as did the Senate (S. 1789), but the two chambers were unable to agree on a final bill.

2013-2022 Savings/Costs (-) in Postal Reform Bills (billions)
  House Bill Senate Bill
Authorize Five-Day Delivery Week $21 $9
Transfer of Retirement Contributions $0 $0
USPS Changes in Spending from Changes in Retirement Contributions -$5 -$6
Changes in Payments to Retiree Health Benefits Fund $0 $0
USPS Changes in Spending from Changes to Health Payments N/A -$11
Increased Credits to People Who Retire N/A ***
Elimination of Annual Appropriations $1 N/A
Payment from Alaska $1 N/A
Change in Mail Service Rates *** N/A
Changes to Workers' Compensation N/A ***
Total Savings $20 -$6

Source: CBO
***Less than $500 million

Postal service reform could give USPS more flexibility to raise revenues and control costs, operating more like its competitors. This may include allowing the Postal Service to further increase its postage rates to cover costs, ending Saturday delivery, run advertisements and making changes to its retirement program. The USPS has already undertaken many measures to reduce costs, including reducing hours, closing processing centers, and reducing the number of employees by 24 percent since 2006.

The Postal Service is in desperate need of reform, and lawmakers should work to revive the work they started in the last Congress. With USPS due to run out of money by October of this year according to some estimates, Congress cannot wait any longer to act.