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The Future of Postal Reform
Burrus Update #18-2004, Dec. 16, 2004
Despite the optimism expressed by many in the postal community, the advocates of postal reform have failed again in 2004 to deliver on their promise of passing legislation.
A group of dedicated legislators worked tirelessly to accomplish the task. U.S. Representatives Tom Davis, Henry Waxman, John McHugh and Danny Davis, along with Senators Susan Collins, Joe Lieberman, Tom Carper, and Arlen Specter (and their staffs) addressed the concerns of many disparate groups to write bills that were acceptable to organizations with differing interests. Unanimous votes by House and Senate committees approving the legislation reflected the lawmakers’ success.
The bills were the result of multiple compromises, so they were not perfect. But they would have addressed fundamental issues that will confront the Postal Service over the next 30 years.
Unfortunately the bills died, without consideration by the full House and Senate.
Early On
When the most recent rumblings about reform began more than two years ago, the APWU rejected the premise that drastic measures were necessary to “save” the Postal Service, and we disputed the notion that reduced mail volume and the increased use of computer-driven messages justified a major restructuring of the nation’s mail system.
We resigned ourselves to the political reality that far-reaching reform would be considered over our objections, however, and insisted that if reform was to be considered, excessive postage discounts should be an important topic in the debate. We aggressively pursued that goal and achieved some success.
The APWU maintained that the excessive discounts given to large mailers were the root cause of the Postal Service’s financial difficulties. We also believed that the terrorist attacks of Sept. 11, 2001, the anthrax attacks a month later, and a severe recession created a unique set of circumstances that could not serve as a predictor of future mail volume.
In testimony before the House Special Panel on Postal Reform in February 2004, I cautioned against “drawing firm conclusions based upon the experience of the past three years,” and noted that “the facts simply do not support a conclusion that the Postal Service is in a death spiral.”
Current reports confirm that view: Total mail volume has increased; service scores are at an all-time high, postal debt has declined, and deficits, which were expected to increase dramatically, have been converted to surpluses of $3.9 billion in 2003 and $3.1 billion in 2004. The sky has not fallen. The Postal Service is not facing imminent demise.
Short-Term Goals
So, if postal reform is not necessary to stave off collapse, what would be its immediate utility? The short answer is that without legislative relief, some analysts predict that rate increases in 2006 could be more than 20 percent. This alarming projection has not gone unnoticed in the mailing community and those who aggressively supported wide-ranging postal reform have now shifted their attention to the short-term affect of the military retirement payments and escrow account on 2006 postage rates. Paraphrasing others, “We told you so.”
In my testimony before the House Special Panel, I said:
“Primary attention [must] be focused on the recommendation that the Postal Service be relieved of the military costs, and that the escrow of the CSRS contribution be resolved.”
I concluded by saying:
“This is not process or procedure; this is real money, and any serious effort at reform must begin with relief from these burdens. If the objective is to stabilize the Postal Service and secure its future, this is where the process must begin.”
At the time, the APWU position was viewed as obstructionist; but time has a way of modifying positions that once seemed unyielding.
Options Dwindling
Now postal reform has once again been derailed. Failure in 2000, 2001, 2002, and 2003 did not prepare the optimists in the postal community for the obstacles in 2004, but events have overtaken earlier assumptions. Those who naïvely embraced White House involvement in 2003 have turned to critics, noting that the Bush administration has its own agenda. As I cautioned early in the debate, “be careful what you ask for, you might just get it.”
President Bush has laid down a marker, demanding more aggressive change to the Postal Service. He has also rejected the unanimous position of the postal community and key congressional committees regarding the military retirement payments and the escrow account. Meetings with White House officials served only to harden the administration’s position.
Faced with this intractable position, mailers now project that a first-class stamp will cost 41 cents in 2006. The options are dwindling.
To complicate matters further, the Board of Governors is in flux; postal management has been placed on a short leash, limiting its authority to take a position or to engage in legislative strategies; and major mailers and other advocates for reform are floundering, offering little more than criticism of the administration and predicting gloom and doom as a consequence of exploding rates.
Notwithstanding the hand wringing, no strategy has emerged to confront the most important issues that would require legislative intervention – the military pension and the escrow account. This was true in February 2004 and it remains true today. Given the current chaos, postage rates will explode, while those who could have made a difference wonder what could have been.
APWU’s position has not changed. The sky did not fall: volume and service scores are up; debt is down, and the bottom line shows $7 billion in surpluses over the last two years. While flexible rates, transparency, defining the role of the Postal Service and the opportunity to engage in competitive adventures would be welcomed, the real and immediate problem is the size of the 2006 rate increase. Any entity truly concerned about the future of the USPS must address that issue or continue the folly of aligning chairs on the deck of the Titanic.
William Burrus
President
