Five Essential Elements of Effective Postal ReformSeptember 8, 2011
The Honorable Louis J. Giuliano
Board of Governors
United States Postal Service
475 L’Enfant Plaza, SW
Washington, DC 20260-3100
Dear Chairman Giuliano:
We, the undersigned, represent American taxpayers and consumers of postal services. At this crucial juncture in the Postal Service’s history, meaningful reform seems a fundamental requirement for future sustainability. Above all, effective reform must benefit the American people, not just extend the Service’s longevity. These are our five essential elements of effective reform:
Cost control. We recognize the valuable leadership current and recent Postal Service management have exercised to lower operating costs in line with declining revenue. The Postal Service needs maximum flexibility to reduce labor costs and to bring its retail, mail processing and delivery networks in line with currently-projected volume trends. Management deserves great credit for progress made to date, but much more must still be done to return the sustainability of the business model.
Protection for monopoly consumers. The Postal Service’s monopoly-protected and market-dominant services currently provide more than 85 percent of total revenues. The household and business customers who depend on these services must currently pay a much higher share of organizational costs than consumers of competitive products and services. Moving forward, monopoly consumers deserve adequate protection against subsidizing other Postal Service functions, either through overpayment or through reductions in service.
Financial transparency. Transparency and better cost attribution have improved under the Postal Accountability and Enhancement Act, allowing postal management to increase efficiency, and observers to monitor their progress. Ensuring adequate public transparency also helps prevent abuse of the Postal Service’s monopoly power. Yet postal regulators have raised concerns about the Postal Service’s ability to utilize financial data effectively in some pricing proceedings, and gaps in public financial transparency continue to imperil confidence among stakeholders and consumers.
Consolidate facilities, cut costs. It is time to follow the recommendation of the Presidential Postal Commission to create an independent panel modeled after the Pentagon’s Base Realignment and Closure Commission, which achieved billions in savings through four rounds of closures and consolidations. The panel would consider closing or consolidating postal processing and distribution facilities that it identifies as unnecessary to fulfilling the Postal Service’s core competencies: the reliable, affordable delivery of the mail to every American home and business. The commission’s process would fully consider concerns of communities and other interested parties.
Avert unfair taxpayer-funded bailouts. For the last generation, the Postal Service has been one of the most efficient and responsive government institutions because it is primarily supported by revenue from mail users, including households and small businesses. To maintain the benefits of a self-supporting Postal Service, protect taxpayers, and prevent the government from falling further into debt, this country needs genuine postal reform, not a taxpayer bailout.
Citizens Against Government Waste
Institute for Research on the Economics of Taxation
National Taxpayers Union
Consumer Postal Council