However, our excitement was followed by dismay as we continued reading and saw that for the second time in five months, Leslie K. Paige of the Citizens Against Government Waste is misrepresenting facts concerning the Postal Service and the urgent need for passage of H.R. 756, the postal reform legislation currently pending before Congress.
While Ms. Paige presents a litany of misstatements, it’s important for us to focus on setting the record straight on some major issues. The reality is that enactment of H.R.756, along with a favorable resolution of the Postal Regulatory Commission’s (PRC) 10-year pricing system review and continued aggressive management actions to control costs and grow revenue, will enable the Postal Service to meet its financial obligations and continue to provide affordable, reliable, and secure delivery service to every business and home in America for years to come.
The centerpiece of H.R. 756 is its requirement that postal retirees generally enroll in Medicare, which would ensure that the Postal Service’s retiree health benefits program aligns with private sector best practices. In this regard, it is a universal practice for businesses that still provide retiree health benefits to fully integrate with Medicare. Indeed, the Postal Service and its employees have paid over $31 billion in Medicare taxes. While most postal annuitants enroll in Medicare, some annuitants do not, to the detriment of the Postal Service and those who do enroll. H.R. 756 simply requires that postal annuitants take advantage of the Medicare benefits that they have paid for.
The ten-year review is also critical because the current regulatory structure governing our ability to adjust prices of market-dominant products, which produce more than 70 percent of our revenue, is predicated on an austere price cap that does not take changes in Postal Service volumes and costs into account. As the past decade has clearly shown, this system is wholly unsuitable to ensuring the Postal Service’s continued ability to provide prompt and reliable universal services, and meet our other statutory obligations, in a self-sufficient manner. The Postal Service simply seeks a structure that gives us the ability to set prices at levels necessary to ensure our financial stability.
The Postal Service currently charges rates that are among the lowest in the industrialized world, and posts throughout the world have used price increases as one tool to address the financial challenges of declining demand for the mail. Despite Ms. Paige’s baseless claim to the contrary, the evidence shows that the Postal Service also has the ability to use price increases as one means of addressing its current financial condition. Moreover, under the Postal Service’s proposal, the rates for market-dominant products would continue to be comprehensively regulated by the PRC. However, given the characteristics of the current postal marketplace, there is simply no longer a need for a price cap to ensure that the Postal Service has strong incentives to operate efficiently and to set reasonable prices.
It is also absurd to indicate, as Ms. Paige does, that the Postal Service is “questioning” the value of workshare discounts as part of the 10-year review. There is no doubt as to the value of the worksharing program. Rather, the Postal Service is simply opposed to the imposition of a regulatory mandate that it use a single, rigid pricing approach when setting the level of those discounts. The Postal Service instead seeks the preserve the flexibility that it has today in making pricing decisions regarding workshare discounts.
The Postal Service has made, and is making, tremendous strides on not only service, but in right-sizing our network and infrastructure within the constraints of our existing business model and current legal obligations, increasing workforce flexibility, and establishing a more affordable, two-tiered wage system. This aggressive agenda of cost cutting, efficiency improvements, and innovation has resulted in approximately $14 billion in annual savings.
Studies consistently show that the Postal Service is one of the most efficient posts in the world. We have also been very successful in growing package volume and revenue, which provides critical support to maintaining the network needed to deliver to each and every address in the United States, six days a week, and to provide to every American mail delivery no matter where they live, at an affordable rate.
There is a sensible path forward that depends upon the passage of provisions in the H.R. 756 postal reform bill, combined with a favorable outcome of the PRC’s 10-year pricing system review. Once enacted, and together with regulatory reform and aggressive management actions, the Postal Service can meet all of our obligations and continue to improve the way we serve the American public.