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U.S. Postal Service Reform



These days there is much discussion about a number of issues related to the US Postal Service. Congress is currently considering several bills for addressing these issues.

The broadest issue is that US Postal Service has been under a lot of financial pressure because of two problems.

  • The level of Postal Service business went down a lot during the economic downturn.
  • With the growth of the Internet, the volume of some kinds of mail have gone down, which has reduced Postal Service revenues--i.e., the money it makes.
Though the Internet has been good for the Postal Service’s package business, it has also reduced the use of first class mail. Because of these two problems the US Postal Service lost quite a lot of money between 2008 and 2012 and it had to borrow money as a result.

More recently, two things have happened that have improved this situation.
  • The economy improved, increasing mailing activity and thus increasing the Postal Service’s revenues.
  • The Postal Service made many changes in the way it operates, significantly reducing the size of its workforce and making its operations more efficient, and thus reducing costs.
But right now the Postal Service is still not making enough money to meet the requirements that Congress has set for it.

Numerous options have been proposed by the Postmaster General and in Congress to address this problem. Many of these options would make the Postal Service more efficient. But they are controversial because they also require making changes that could reduce the level of service to customers. We will look at these proposals shortly.

Another option is to reduce a certain requirement that Congress has placed on the Postal Service related to its retiree health benefits program. This option has stimulated quite a lot of attention and debate because if Congress were to remove or modify this requirement this would substantially lessen the pressure on the Postal Service’s finances. So we will address it first.