President Donald Trump is angry at Amazon for, in his tweeted words, “costing the United States Post Office massive amounts of money for being their Delivery Boy.” Yet in more recent days, Trump has at least channeled his feelings in what could prove a constructive direction, by ordering a task force to spend 120 days on a “thorough evaluation of the operations and finances” of the U.S. Postal Service, including recommendations for reform. That would certainly be preferable to more Twitter battles.
Trump’s top priority for the task force is a study of package delivery pricing for the Postal Service’s clients, including Amazon, of which Washington Post owner Jeff Bezos is CEO and chairman. This is a perfectly legitimate subject for study and not one on which we would offer a view.
But package delivery is not the fundamental cause of the Postal Service’s chronic problems. Rather, it has a basic structural problem: Technology has caused a permanent loss of its most profitable line of business, first-class mail, while it still must pay high and rising legacy costs for retiree and employee health care and pensions. Products that account for 74 percent of Postal Service revenue are covered by a statutory price cap.
Trump’s task force’s report will land on top of an already-towering pile of previous studies confirming the above analysis. In 2016, financial expert James Millstein provided the Senate an exhaustive report on the agency’s need for restructuring. A key fact from Millstein’s report: In 1995, the Postal Service moved 181 billion pieces of mail, while the internet transmitted 100 billion e-mails and text messages; in 2010, the Postal Service moved 172 billion pieces, while the internet transmitted 216 trillion e-mails and texts.
The Postal Service has been keeping itself afloat in recent years by growing the package business and, less entrepreneurially, drawing on a line of credit with the U.S. Treasury and defaulting on roughly $34 billion from 2012 through 2016 in mandatory prepayments to its health insurance fund. Only Congress can provide a more permanent solution. Yet that has proved elusive because none of the “stakeholders” with an interest in the status quo — unions, regulators, shippers, rural communities, bulk mailers — are eager to surrender those aspects of it that benefit them.
Last year, everyone converged on a modest reform plan in the House. It would have allowed the Postal Service to raise first-class rates modestly, while shifting some retiree health care costs to Medicare. The bill would have saved $28.6 billion over five years, but it did not pass; supporters recently introduced a similar measure in the Senate. Trump could support that as a first step toward the more fundamental change that the Postal Service needs.
FROM AN EDITORIAL IN THE WASHINGTON POST