USPS Seeks Industry Allies in Reform Push

The U.S. Postal Service is taking its pitch for vast postal reform directly to Congress and nudging its big customers to do the same.
Already, Postal Service officials have briefed more than 150 lawmakers on their proposal to transform the agency into a profit-making enterprise.

The Postal Service strategy, which appears to bypass an appeal to the broader American public, may be the most effective available, given that the greatest interest in low postage rates and universal service comes from business.

But it may not be enough to get Congress to act, many observers say.

“It is going to be very difficult to get this through,” said Ruth Goldway, a member of the Postal Rate Commission. “They need to at least present a much more detailed plan, and they need to get more support for it.”

The commission is an independent body that recommends for or against postage rates sought by the Postal Service.

The Postal Service has been running deficits for two years and insists it needs more flexibility in pricing and product development to turn itself around. The last time it was restructured was in 1970. But then, Goldway said, circumstances were much different. Presidents Johnson and Nixon both had expressed the need for postal reform, bipartisan commissions were pushing the idea, and the public was vocal about the need for reform following a postal carrier strike in 1969.

Today, by contrast, the sense of urgency does not extend much beyond the big mailers and the Postal Service itself. “There is some talk the president may be looking into it. But that may be awhile,” Goldway said.

The Direct Marketing Association, which represents 5,000 companies that rely heavily on the mail, supports restructuring the Postal Service.

On April 29 the association ran a full-page ad in Roll Call, a newspaper that covers Capitol Hill, listing the revenue and employment benefits of the Postal Service for each congressional district.

But support even from the large mailers, many of whom gathered in San Diego April 21 through 24 for the semiannual Postal Forum, may be thin, said Neal Denton, executive director of the Alliance for Nonprofit Mailers, an industry advocate group in Washington, D.C.

“I think the Postal Service is finding a lot of mailers supportive of the short-term plan for cost-cutting, and they believe that that translates into support for the long-term plan [for structural reform],” Denton said. “But we can’t give them the keys to the big car until we know they can drive the small one.”

Denton said if the Postal Service does succeed with the initial cost-cutting, then the larger reform proposal — a change in the charter expanding its powers — may prove unnecessary. “If the Postal Service does control its costs, we may see we don’t need a long-term plan.”

It is those mailers, however, that the Postal Service is counting on help sell the transformation plan to Congress.

At the Postal Forum, Postmaster General John Potter said the mailing community appeared generally supportive of the plan. Getting the mailers on board is a key part of the Postal Service strategy to win over Congress.

“We have been trying to get all the stakeholders together and have been telling them that this is not a Postal Service issue, that it’s a mailing industry issue,” Patrick Donahoe, the Postal Service’s chief operating officer, told Federal Times.

Those stakeholders include the 750,000 mostly unionized postal work force, which is “very supportive” of the transformation plan, Donahoe said.

However, two of the unions have expressed objections to one major provision of the Postal Service’s plan that would do away with binding arbitration in wage and benefit disputes and open the door to walkouts and lockouts.

Donahoe played down that part of the plan and suggested the Postal Service was open to compromise. “We want to work with the unions and find out the best solution,” he said. “They know a strong Postal Service is for union employment.”

If stakeholders are backing the reform, David Fineman, vice chairman of the Postal Service Board of Governors, said, so far, they have not made their voice heard where it counts. “There’s been a failure by the vested interests to get together to bring this issue to Congress.”

But he added that Congress is not likely to act on the transformation proposals until the Postal Service first demonstrates “that it is acting in a responsible way.”

Rep. John McHugh, R-N.Y., who is pushing his own reform plan and led the reform effort as chairman of a now-defunct postal subcommittee, said the Postal Service’s plan underscored the need for reform.

In a statement April 5, he urged his fellow congressmen to act on his reform proposal soon because “time is running out.”

Reform is “not something five or 10 years down the road,” McHugh said to colleagues, who have shown little interest in the matter. “The crisis is upon us.”

Deborah Willhite, the Postal Service’s senior vice president of government relations and public policy, said that during one of her visits to Capitol Hill, “one member of Congress said to me, ‘We need to let this get to the point where it’s a crisis and then we’ll act.’ ”

One obstacle that appears to confront the Postal Service is a perception by some that too few people are convinced the Postal Service needs fixing.

“In the ’70s everyone knew the system was broke because the mail stopped,” said Johnray Egelhoff, Postal Service district manager in Las Vegas. “Now, it’s just a matter of [a shortfall of] money. So how do you get the message to Congress that the system is broke?”

The general public does not see a Postal Service in crisis, paradoxically, because service ratings — at least for first-class mail — are high.

“The general public is satisfied with our performance,” Donahoe said. “That’s why we’re trying to work with the stakeholders. They understand the issues.”

But getting those stakeholders on board will not be a cinch, according to the rate commission’s Goldway. The transformation plan has too many unanswered questions and a lack of specifics.

There are “two big beasts in the closet” that are mostly unaddressed, Goldway said: labor reform and the huge unfunded retirement liability that the Postal Service has so far made no provision for.

In addition, there are numerous smaller matters to be sorted out, such as how the Board of Governors would be constituted and whether the Postal Service should be allowed to make profits, Goldway said. “All those questions have to be answered.”