Congress must find ways to pay for US mail service, says GAO

If the US Congress wants to retain the current delivery service standards and mail processing network at the US Postal Service, it will need to find ways to pay for it, the Government Accountability Office (GAO) said today. The Congressional watchdogs issued an update on the situation at USPS as unions staged protests today against hundreds of proposed mail plant closures around the United States.

Congress is expected to consider proposed postal reforms when it comes back from recess next week, in a bid to rescue USPS from its multi-billion dollar losses.

The GAO said today that it was “abundantly clear” that the business model of the US Postal Service needed to be fixed.

First Class Mail volumes have declined nearly 30% since their peak in 2001, and are forecast to continue falling rapidly. Forecasts for standard mail volumes is that they will remain “roughly flat” in growth terms until 2020. However, while much First Class Mail is processed end-to-end by the USPS network, 83% of Standard Mail is entered into the network close to it destination, bypassing most of the process.

The GAO said USPS has already acted since 2006 to take $2.4bn of annual operating costs out of its system by closing 32% of its mail processing facilities and cutting jobs by 20% through attrition.

In its update to Congress, the GAO highlighted various customer and employee concerns with plans to continue downsizing the processing infrastructure, most notably that reducing service standards would drive more customers away, further accelerating the decline in mail volumes.

In recent days and weeks, Congressmen from around the US have objected to USPS consolidation plans, particularly on the grounds of the potential for 35,000 jobs to be lost as more than 200 mail plants are closed.

Some lawmakers have gone on record stating their preference for blocking legislation to save the Postal Service, rather than allowing mail service standards to be further eroded.

Action needed

The GAO said today that both Congress and USPS leadership is needed to optimise the current postal network, and that without Congressional action at all, USPS would fall further into debt.

But, the investigative arm of Congress added that if lawmakers do want to protect USPS mail standards, they will have to find a way to pay for it.

At present, USPS is limited in how much it can raise its postal rates each year, and also has legal restrictions on the extent to which it can offer non-postal products, and postal services like beer and wine delivery.

“If Congress prefers to retain the current delivery service standards and associated network, decisions will be needed about how USPS’s costs for providing these services will be paid, including additional cost reductions or revenue sources,” concluded the GAO report.

Carper

Senator Tom Carper, one of the leading proponents of postal reform in the US Congress, and one of those who ordered today’s GAO report along with Senator Susan Collins and Representative Darrell Issa, said this afternoon that the report confirmed that USPS has “far more processing capacity than it needs”.

Carper echoed the sentiment of the GAO report that lawmakers will have to find a way to pay for mail services if they want to maintain the current system.

“Many in Congress strongly believe that the Postal Service’s most recent proposal to close more than 200 additional mail processing facilities is the wrong approach,” he said.

“I’ve long maintained that if something is worth having, it is worth paying for. If Congress wants to require the Postal Service to maintain additional mail processing facilities, we have to figure out a way to reduce costs elsewhere, or raise revenues.”

US Postmaster General Patrick Donahoe hinted last month that there could be a middle way, to avoid closing all the plants being proposed for consolidation by finding ways to raise revenues, such as through a significant hike in single-piece First Class Mail rates.