Reform the U.S. Postal Service for the right reasons
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The U.S. Postal Service has just reached the halfway point for its 2017 fiscal year and the latest results only look like more bad news for the struggling agency – another loss of $562 million. For those counting, USPS has dealt with multi-billion dollar losses for 10 years running.

Interestingly, despite its wayward financial path, Wall Street has grown bullish on the Postal Service’s outlook. Yes, you read that right – leading financial analysts at Morgan Stanley actually believe that USPS could by primed to make substantive inroads in the nation’s increasingly fluid and crowded logistics market.

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But how could this be for the Postal Service, which has amassed $121 billion in unfunded liabilities while losing billions each year? 

The answer is the work of Congress. They are looking to give the USPS a leg up through misnamed legislation working its way through Congress, known as the Postal Service Reform Act of 2017. (Truth in Labeling does not apply to legislation in Congress.) While the analysts do have some hesitation about USPS’ financial position, this bill has quickly allayed many major qualms based on the drastic measures that policymakers seem prepared to take.

These provisions of the bill include a major effort to shift the liabilities for the unfunded retiree health benefits to the Medicare program, which is already struggling with its own solvency issues.  Additionally, it establishes a nearly unrestricted process for USPS to raise letter mail prices.

So what does this mean? It definitively signifies that some in Congress are ready to repair the Postal Service’s financial position by shifting the massive burden to unstable federal programs (and thus taxpayers), and also the millions of individuals who rely on the mail system regularly.

If this sounds like bailout, that’s because it is.

So the framework underpinning the Morgan Stanley analysis is an expectation that USPS can extensively extract new market share thanks to the assistance provided by lawmakers. It’s a clear case of Congress propping up a government-protected monopoly at the expense of existing logistics operators who are not privy to such advantages.

Further, there’s no telling which markets the Postal Service may seek to invade next given that Congress is intent on creating an “innovation officer” as a key new leadership role. This person will have free reign to explore additional far-fetched business ideas for the agency beyond what they are already attempting to take on. Moreover, the bill authorizes the Postal Service to provide non-postal services, which may include banking, retail, and grocery delivery, among others. That puts a subsidized government entity in unfair competition with private companies, including small business. Far too often the status quo for the Postal Service has been to implement new ventures first, and then ask questions about their financially feasibility later.

With this kind of approach it’s no wonder why billions of debts have piled up.

Ultimately, instead of legislation, the Postal Service really just needs smart decision makers who can appreciate the “do more with less” philosophy. When the Founding Fathers created the Post Office in the Constitution, it was always determined that its core service would most appropriately be the delivery of letters.  The Postal Service has long enjoyed, and operates today, as a monopoly on first class mail service. The founders did so because they intuitively recognized the opportunity to fulfill a critical need for citizens across the country, while also earning enough money to maintain a functional system long term.

Today these concepts continue to prevail as First-Class and Standard Mail letter service have netted the USPS over $30 billion in 2016 alone.  Such gains would be immensely useful in helping the Postal Service to find stability, but the agency has become so complex and taken on so many lines of service that make continued losses inevitable.

After years of financial turmoil, the best path for Congress should be to do what’s best for mail customers and taxpayers, and worry less about what Wall Street thinks.

John M. Palatiello is president of the Business Coalition for Fair Competition an organization that comprises trade associations, businesses, and organizations dedicated to free enterprise, relief from unfair government-sponsored competition, and maximum government reliance on the private sector.


The views expressed by this author are their own and are not the views of The Hill.