Trump's Fix for Post Office's Deep Losses: Cut Back Saturday Delivery -- Update
May 26 2017 - 3:57PM
Dow Jones News
By Paul Ziobro
President Donald Trump's proposed budget would let the U.S.
Postal Service cut back on delivery days, a move that would help
the unprofitable agency save money but put it at odds with
longstanding congressional demands.
The USPS currently delivers mail six days a week across the
country, while also offering Sunday package delivery for internet
giant Amazon.com Inc. and others.
The White House budget released last week would let the
quasigovernmental agency reduce delivery frequency "where there is
a business case for doing so." It is one of several proposals to
address the financial struggles at the USPS.
The USPS has posted multibillion-dollar losses each year over
the past decade, largely due to requirements to prefund retiree
health benefits. The White House forecasts annual losses will
continue at about $5 billion
The White House is also pushing for changes on how rates are set
and for more efficient delivery options, like dropping off letters
at "cluster boxes" for residents of a neighborhood or property
development rather than going door to door. It estimates the
overhauls could improve the USPS's financial picture by $47 billion
over the next decade.
"Details are pending a larger conversation with Congress," said
White House budget spokesman Coalter Baker. He said that since
fiscal 2012, the postal service has drained its $15 billion line of
credit with Treasury and defaulted on $34 billion in retiree
benefit prepayments. "If nothing changes, the Postal Service will
continue to default on payments at significant levels," he
said.
A USPS spokesman said the agency "appreciates that the
president's proposed 2018 budget recognizes the need to enact
postal legislative and regulatory reform. Both are essential to
enabling the Postal Service to meet its obligations in a
financially sustainable manner."
Most of the White House's changes in the budget document fit
with postal-overhaul proposals that passed the House Oversight and
Government Reform Committee with bipartisan support. The
legislation also would change how the agency calculates pension
costs and liabilities and would automatically enroll USPS retirees
in Medicare programs.
A Senate postal overhaul bill has yet to be introduced.
The option to reduce delivery days, however, could set up a
showdown in Congress.
Congress has swatted away several attempts to curb six-day a
week delivery. The USPS, in an attempt to save $2 billion annually,
in 2013 tried to cut mail delivery to five days a week while
continuing to deliver packages on Saturdays. The proposal met stiff
opposition from postal unions and congressional members and was
dropped.
Annual federal appropriations bills that compensate the USPS for
free and reduced rate mailing have long contained language that
requires a six-day delivery schedule. Former President Barack Obama
also included the stipulation to keep the current delivery schedule
intact in his budget proposals.
"There's no congressional consensus around moving to five-day
delivery," Postmaster General Megan Brennan said during a February
hearing on the postal-overhaul legislation.
In fact, the USPS is thinking about the issue differently. As
first-class mail remains in a secular decline owing to electronic
communication, e-commerce deliveries have surged. Packages now make
up about 28% of overall revenue, up from nearly 20% in fiscal
2014.
With that added volume, the USPS is delivering more days to
accommodate the extra packages. Four years ago, the USPS started
delivering packages for Amazon.com on Sundays. Ms. Brennan has said
in the past that the USPS "is looking at how do we leverage our
infrastructure, which is an asset."
The National Association of Letter Carriers, the largest postal
union, said this week it would oppose any budget plan that reduces
delivery.
"Thanks to the e-commerce boom, the Postal Service is now
delivering seven days a week -- now is not the time to curtail
delivery days or reduce door delivery," said Fredric Rolando, the
union's president.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
May 26, 2017 16:42 ET (20:42 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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