August 28, 2019
Holding True to the 1970 Vision of a Mailer-Funded USPS
The Postal Reorganization Act that was signed into law by President Richard Nixon in 1970, and the Kappel Commission that preceded it, had the primary goal of enabling the United States Postal Service to operate like a business. It had been a cabinet-level agency with the President choosing the Postmaster General, and Congress setting rates, determining service levels, and even appointing local postmasters.
It is generally agreed that the new USPS worked well as a mostly mailer-funded, businesslike, government-owned enterprise for about 30 years.
It also is agreed that USPS benefited from some very timely tailwinds:
For these and other reasons, the 1970 USPS vision seemed to work very well for about 30 years. Indeed, what monopoly organization with these conditions would not do well.
Fast-forward to 2019 and the USPS is in trouble again, much as it was 50 years ago. Most of the tailwinds are gone. And they have been replaced by substantial headwinds. The seeds have been planted to jettison the two remaining tailwinds: economic growth and postage rate increases in line with inflation. The perceived savior of e-commerce-driven last-mile package delivery is in danger of being eclipsed by more efficient private sector competitors.
Today, four sets of policymakers are advancing potential solutions to the problem:
We believe that the four policymakers have two enormously important things in common:
The current political environment does not countenance legislation that adds to the federal deficit. Yet our federal government debt continues to grow much larger and faster than the USPS debt. The policymakers responsible for the out of control federal debt are the same ones who declare that they will prevent a “taxpayer bailout” of the USPS at any cost. In turn, everyone in a position to help treats a discussion of the USO and how to pay for it as off limits or someone else’s responsibility.
If the leaders of the effort to reform the USPS cling to the 1970 vision that worked well only for a short time, they will be missing a great opportunity to save a great institution. Indeed, some of the intended cures will be much worse than the problem at hand.