Preserving The U.S. Postal Service For The 21st Century

On January 8th, Americans saw the cost of the first-class postage stamp increase by two cents, to 39 cents.  While two cents may not seem that significant one letter at a time, this increase will cost postal customers billions of dollars over the next several years, and nowhere will this increase be felt more than by the nine million Americans whose jobs and businesses rely on the United States Postal Service.             Many people do not realize the enormous role the Postal Service plays in the American economy.  The U.S. Postal Service is the lynchpin of a $900 billion mailing industry that employs nine million Americans.  Maine employers ranging from L.L. Bean and Cuddledown to printers and paper manufacturers are dependent on a healthy postal service.  Universal access and affordable rates are vital for this important economic sector.             Over the past few years, however, the Postal Service has been plagued by serious financial and operational problems that threaten its long-term viability. At present, the Postal Service’s liabilities are enormous—to the tune of nearly $7 billion for Workers’ Compensation claims, $5 billion for retirement costs, and as much as $45 billion to cover retiree health care costs.   The Postal Service is also grappling with declining volumes of first-class mail as business communications, bills and payments have been moving more and more to the Internet.  The Postal Service has faced declining volumes of first-class mail for the past four years, matters because first-class mail accounts for 48 percent of total mail volume and the revenue it generates pays for more than two-thirds of the Postal Service’s institutional costs.  That volume decline causes the Postal Service to seek rate increases, which, in turn, causes further declines in volume as mailers seek alternatives.  The Government Accountability Office warns that this could lead to a “death spiral” for this vital institution.   The Postal Service also faces the difficult task of trying to cut costs from its nationwide infrastructure and transportation network.  These costs are difficult to cut.  Even though volumes may be decreasing, carriers must still deliver six days a week to more than 139 million addresses nationwide.               Fortunately, the U.S. Senate has taken an important step toward strengthening the financial future of the Postal Service by approving the “Postal Accountability and Enhancement Act.”   I was joined by my colleague, Senator Thomas Carper (D-DE), in authoring this bipartisan legislation, which makes the most sweeping reforms to the Postal Service in more than 30 years.  Our bill modernizes the rate-setting process to provide more predictability and helps ensure a stronger financial future for the organization.   First and foremost, the Collins-Carper bill preserves the basic features of universal service: affordable rates, frequent delivery, and convenient community access to retail postal services.  I want to ensure that in large, rural states like Maine, individuals living in the northern woods, or on the islands, or in our many rural small towns, have the same access to postal services as the people of our cities.    Our bill reforms the rate-setting process to make rates more predictable and stable. This is a key reform not only for the Postal Service but also for postal customers. The current rate-setting system is unpredictable, costly, lengthy, and too litigious.   Finally, the Collins-Carper bill frees up $78 billion over a ten-year period by releasing overpayments to the Civil Service Retirement System that have been held in an escrow account. That would help to delay the need for rate increases and would allow the Postal Service to pay down its debt and begin funding its liability for health care for its retirees.   The Collins-Carper bill is a culmination of years of work and has broad support among the mailing industry including the Coalition for a 21st Century Postal Service -- which represents hundreds of large and small mailers, the Financial Services Roundtable, United Parcel Service, FedEx, R.R. Donnelley, the city and rural letter carrier unions, the postmasters and postal supervisor associations, and numerous non-profit organizations such as AARP, the Disabled Veterans of America, and the American Institute for Cancer Research. The U.S. House of Representatives has also passed its version of postal reform legislation. And while the bills have some differences, I believe that we have a great opportunity to work together on a compromise that will ensure a stronger future for the Postal Service.