Postal "Reform" Legislation Would Stamp Out Competition, Hit Taxpayers and Consumers with Hidden Costs, Study Finds

(Alexandria, VA) -- As volatile energy prices threaten to push the Postal Service's deficit (and planned rate hike) even higher, Congress's second-class postal "reform" legislation is not up to the job of protecting consumers and taxpayers: that's the assessment of an Issue Brief released today from the 350,000-member National Taxpayers Union (NTU), which is urging the U.S. Senate to reject the so-called "Postal Accountability and Enhancement Act" currently awaiting floor action after the House passed its own bill in July.

"Far from launching comprehensive reforms to bring the nation's ailing postal monopoly into the 21st Century, the legislation now grinding its way through Congress merely offers a recycled 'grab bag' of reorganization measures," said NTU Government Affairs Manager and Issue Brief author Kristina Rasmussen. "Fortunately, the Senate, and if necessary the President, can still send these bills to the dead-letter bin."

According to Rasmussen, one of the first mistakes legislators made in drafting the current postal bills (H.R. 22 and S. 662) was to largely ignore the recommendations of the President's Commission on the U.S. Postal Service (USPS). Though that panel disappointingly spurned full-scale privatization, its suggestions could have been the basis of honest reform legislation. Instead, H.R. 22 and S. 662 are fraught with hidden liabilities:

  • Paltry Savings. Even though the average postal employee is 25 percent better-compensated than his or her private-sector counterpart, and billions have been spent on labor-enhancing technologies, USPS productivity gains have been negligible. Yet, instead of tackling problems like these, S. 662 makes only cosmetic changes -- according to the Congressional Budget Office, the bill would only reduce USPS's costs by 1 percent over the next 25 years.
  • Political Patronage. The bills offer no substantive process for consolidating unnecessary facilities. "Given the propensity of politicians for naming local Post Offices (an estimated 12 percent of all public laws passed in the 107th Congress), it is no wonder Members decided not to include that option in either of these bills," Rasmussen wryly noted.
  • Pricing Rip-Offs. Both H.R. 22 and S. 662 pretend to limit price hikes for monopolistic products like First-Class Mail to the rate of inflation, but the legislation allows the cap to be broken whenever "reasonable or equitable" or during "unexpected and extraordinary circumstances"!
  • Fuzzy Math. In what Rasmussen calls a "reckless game of government hot potato," the bills would shift back to the Treasury some $27 billion in pension obligations to military-veteran postal employees that Congress originally gave to the USPS in 2003. Even though the Postal Service is considered an "off-budget" agency, "haggling over 'who pays' doesn't really address the core problem of liabilities," the author remarked. Meanwhile, H.R. 22 would allow the USPS to tap $6 billion from an "escrow account" of excess pension and disability contributions -- a move that could prevent a forthcoming two-cent rate increase, but would do nothing to ease long-term cost pressures.
  • "Recent economic events have once again shown the need to think beyond the old-style bureaucratic structures in order to provide Americans with the service they deserve," Rasmussen concluded. "If policymakers are truly committed to first-rate postal reform that will keep pace with the rest of the world, then these weak bills should be returned to sender."

    NTU is a non-partisan citizen organization working for lower taxes and smaller government. The group has advocated a phase-out of the postal monopoly for more than two decades. Note: NTU Issue Brief 156, First-Class to Nowhere: Congress's Second-Rate Postal Reform Bill, is available at