NTU Opposes Postal "Reform" Bill, H.R. 22

The Honorable J. Dennis Hastert
Speaker of the House
H-232, The Capitol
Washington, DC 20515

Dear Speaker Hastert:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write in opposition to H.R. 22, the Postal Accountability and Enhancement Act. Although NTU has long called for postal reform, it is impossible for taxpayers to support this poor substitute for reform because it further expands the monopoly powers granted to the United States Postal Service (USPS) and does nothing to bring needed market discipline to the agency.

Ultimately, the only way to truly "reform" the Post Office into an organization that appropriately balances labor costs, pricing issues, and service quality concerns is full privatization. However, even in the absence of such sweeping changes, this legislation is entirely inadequate for several reasons.

H.R. 22 will cost American taxpayers some $27 billion over the next few decades in pension benefits for prior military service, despite the fact that these costs are owed by USPS. Instead, the U.S. Treasury would assume the burden. However, these obligations are Postal Service costs, triggered by retirees' postal employment, and part of the total compensation paid for postal work. Taxpayers should not be saddled with this liability.

Furthermore, the USPS should not be granted additional pricing flexibility unless the agency is exposed to far greater market discipline. Of course, the USPS already has some degree of pricing flexibility, as it has filed a rate case for a two-cent increase this year. If the Postal Service wants more flexibility, then steps like lifting its monopoly on mailboxes and/or first class mail should be considered in tandem.

One way to staunch the flow of red ink coming from the USPS would be to re-focus the agency on its core businesses. According to Treasury Secretary John Snow, over the past 30 years "the Postal Service has suffered real economic losses in excess of $101 billion." In part, these losses are accumulated because USPS continues to subsidize its money-losing adventures with its first-class-mail monopoly. If Congress won't end this monopoly, then the failure to take significant steps to stop the agency from expanding into markets and competing with private businesses is inexcusable.

Lastly, H.R. 22 would reduce the independence of the Postal Board of Governors by guaranteeing a seat on the Board for organized labor. Since the Board is meant to be an independent oversight body, free of outside influence, giving labor unions that have a direct stake in preserving the status quo certainly is not a wise "reform."

NTU is eager to work with you in truly reforming America's mail system. Unfortunately, in its current form, H.R. 22 is not a means to that end and is therefore unacceptable. Votes on final passage of this legislation and on any amendments of importance to taxpayers will be heavily weighted in our annual Ratings of Congress.


Paul J. Gessing
Director of Government Affairs