The Alliance Report – Top Ten FAQs on the Postal Service Reform Act of 2022 – February 23, 2022

Q1: Did it pass the House?


A1: Yes, the Postal service reform Act (PSRA) passed the House on February 8, 2022, after being introduced on May 11, 2021, and reported to the House on July 16, 2021.


Q2: Did the bill have bipartisan support?


A2: Yes, 342 members of the House voted for the bill, including 222 Democrats and 120 Republicans. 92 Republicans voted against the bill.


Q3: Was the bill brought to the Senate?


A3: Yes, Senate Majority Leader Chuck Schumer brought the bill to the Senate almost immediately and promised a swift vote the following week. Most expected the bill to pass because of the strong support in the House and the previous introduction of an identical bill with bipartisan support in the Senate.


Q4: Why has the bill stalled in the Senate?


A4: A House clerk inadvertently sent an earlier version of the bill, slightly different from the final version. Sen. Rick Scott of Florida, the chairman of the National Republican Senatorial Committee, objected to a unanimous consent request from Sen. Schumer to make the needed technical fix to the bill. Scott argued that there are issues with the legislation and that the Senate should slow down and improve it.

Scott has larger political ambitions as seen in his recent release of an “11 Point Plan to Rescue America.”


As a result of Scott’s objection, the Senate was not able to hold a planned vote to advance the bill on February 14. Schumer said that being unable to quickly fix the error will delay the bill, but promised that the Senate will eventually pass it.


It appears that the Senate vote on the postal bill will be sometime in March.


Q5: What are the most important things in the Postal Service Reform Act?


A5: The two most important parts of the bill relieve the Postal Service of significant costs related to the health care benefits promised to USPS retirees.


First, it would rescind the misguided retiree health benefits pre-funding requirement in the 2006 Postal Accountability and Enhancement Act. USPS has not been pre-funding anyway, so this provision would formalize what already has happened, returning the agency to pay-as-you-go retiree health benefits. It also reduces paper losses and liabilities the agency has been reporting for the past decade, although these losses have not used cash.


The fact that the most recent report of USPS cash showed a record balance of $24.296 billion is evidence that the prefunding losses reported for years appear on paper but do not use cash. This part of the PSRA is just aligning the law and postal bean-counting with reality.


Second, the bill would reduce the cost of retiree benefits by forcing all future postal retirees to use Medicare as their primary insurance. About one-fourth now choose to continue their Federal Employees Health Benefits into retirement as all federal employees are allowed. USPS pays significant premiums for FEHB but does not for retirees using Medicare. The savings realized by USPS would increase the costs of the Medicare program which itself is in danger of insolvency. This cost shift is one reason for opposition by Sen. Scott and other Republicans.


USPS estimates it would save over 10 years $27 billion without the pre-funding requirement and $22.6 billion with the Medicare mandate. Reducing USPS costs is a good thing, but retirement costs have nothing to do with the USPS business model, its operations, or its universal service obligation.


Q6: What else is in the PSRA?


A6: The postal bill has several provisions that do not save money and do not address its fabled “broken business model.” They include:

  • USPS may enter into agreements with any state, local, or tribal government, and with other federal agencies, to provide certain non-postal products and services that adequately cover USPS costs and meet other specified criteria. The 2006 postal law severely limited USPS to “postal products.”
  • USPS must develop and maintain a publicly-available dashboard to track service performance and must report regularly on its operations and financial condition. The agency now reports on finances monthly and national service quarterly. The USPS Office of Inspector General has set up a service dashboard, and the PRC announced plans for its dashboard. Dashboards are all the rage. Most larger mailers already measure their mail service, usually with a contractor analyzing their barcodes to see when mail is out for delivery.
  • The PRC must annually submit to USPS a budget of its expenses.
  • The PRC must conduct a study to identify the causes and effects of postal inefficiencies relating to flats (large envelopes, newsletters, journals, magazines, etc.). Heretofore, the regulator mostly has accepted USPS’s word that it is as efficient as possible, and tried to improve cost coverage with excessive rate increases.
  • USPS OIG would perform oversight of the PRC supplanting the regulator’s own IG.

Q7: Is there anything counterproductive in the bill?


A7: Yes, there is one section that was inserted to protect package shippers like Amazon from potential great cost attribution that might drive up their rates more than otherwise. It requires 6-day-a-week delivery of packages and mail through an “integrated network.” Congress had been requiring 6-day-a-week delivery for years in every annual appropriation bill.


USPS has not tried to change 6-day since an aborted attempt by former Postmaster General Pat Donahoe. On February 6, 2013, Donahoe announced that USPS would implement 6-day mail delivery beginning August 5, a change the Postal Service said would “generate cost savings of approximately $2 billion annually, once the plan is fully implemented.” Congress quickly put the kibosh on the idea, including 6-day in the annual appropriation language.


Section 202 of the PSRA is not only unnecessary, but it could also limit USPS management flexibility as it adjusts to less mail and more packages:

“The Postal Service shall maintain an integrated network for the delivery of market-dominant and competitive products (as defined in chapter 36 of this title). Delivery shall occur at least six days a week, except during weeks that include a Federal holiday or in emergency situations, such as natural disasters.”.

Just what an “integrated network” is would be left to USPS and its regulator to interpret with lots of input from postal unions. We know that usually doesn’t go well for mailers.

Q8: What is not in the PSRA that should be?

A8: We need careful and complete consideration of exactly what the universal service obligation of the Postal Service includes, what it will cost, and how we will pay for it. The bill only scratches the surface by requiring that “[d]elivery shall occur at least six days a week.”

Another way to put it is the mantra repeated by USPS leaders for over a decade: “the business model is broken.” PSRA does nothing to fix the broken business model.

The universal service obligation includes everything the postal agency must do that a private sector profit-seeking business would not. Delivery to every address no matter how remote regardless of the amount of mail and packages, is a major portion. So is maintaining 30,000 retail post offices, many of which a business would not continue because they do not cover their costs and are counterproductive for profits.

Instead of taking on the central issue, the bill doubles down on the self-sustaining business model. The hope is that relieving USPS of $50 billion in retirement expenses over ten years, half of which don’t use cash, would enable it to succeed as a business that is saddled with about $5 billion in annual public service costs that competing businesses don’t have to worry about. It would prosper amid a secular decline in the main product, mail, in the hope of continued profitable growth in the hyper-competitive package delivery market.

Q9: Will passage of the PSRA bring relief to mailers who are enduring well above inflation rate increases?

A9: We expect no relief in the near term and are very skeptical about longer-term moderation in rate increases.

The USPS ten-year Delivering For America plan includes both the retiree legislation and the use of the new rate authority to close much of the predicted $160 billion in losses. Indeed, the legislation is the largest portion at $55 billion, with rate hikes second at $44 billion. In other words, external help gives USPS 62 percent of their ten-year goals.

Only $34 billion (21 percent) of DFA goals is from internal cost control and $24 billion (15 percent) from non-rate revenue growth. With all of its unique constraints, mandates, and high costs, several Postmasters General in a row have not been able to significantly control costs or take initiatives that accelerate revenue.

Like most monopolists, USPS has a long and consistent history of using its full rate authority. The most notable exception was after the passage of the 2006 law when Postmaster General Jack Potter decided not to level set rates to capture previous losses. Postal management and unions have been trying to claw that opportunity back at the PRC, the appeals court, and Congress.

Members of the mailing industry who have been lobbying for the PSRA have done so in the hope that removing the retiree costs will benefit mailers at some indeterminate point. It is possible, but how much mail and how many mailers will be left standing when the above-inflation music stops?

Q10: Will Congress continue to work on further needed reforms of USPS after this bill passes?

A10: No. Leading Congressional advocates have described the PSRA as completely overhauling and saving USPS. Congress hates working on postal legislation because of the lack of consensus. A major concern with this inadequate bill is that we will wait years for another chance at real postal reform.