Will Trump task force give Postal Service the reform it’s been looking for?
Kevin Kosar, a senior fellow and the governance project director at the R Street Institute, says the president’s task force will look at ways USPS can adapt its business model — which by its own admission, is “flawed” — to continue to operate in the long-term.
“The whole model of the Postal Service, as it was created 1971, was that this is supposed to be a self-funding entity. What we see now, and what the executive order flags, is that this thing may not be able to do that, and it may end up being bailed out by taxpayers,” Kosar said.
Unlike other government agencies, USPS receives no annual funding from Congress, and largely operates on the revenue it generates from delivering mail and packages. But since 2010, the Postal Service has seen first-class mail, one of its biggest profit drivers, decrease by nearly 25 percent.
“The long-term picture is very problematic. It’s just not clear how the organization is going to earn revenue in excess of the cost of running it,” Kosar said.
Kosar said it’s hard to get good data that clarifies whether parcels are making money or not. Part of the problem, he said, is how to compare the costs of a letter carrier delivering a package versus a letter.
“How do you break up the cost of his time and attribute to that parcel? Do you divide it by the total number of things that he’s carrying that day? Do you divide it by the amount of labor it takes to lug a big, heavy box? Do you attribute it to the truck, if you have to use a truck instead of walking on foot? It gets into this complex accountancy stuff,” Kosar said. “While the spirit of the law was that we should be able to clearly define these lines of business and attribute the costs and revenues to each side, that’s really hard to do.”
Each year, the PRC does an annual compliance determination, which looks at whether each type of mail and package product covers its share of the costs. But Kosar said the president’s task force will take a deeper dive into the USPS business model.
“The Trump task force certainly has mandate way beyond what the PRC has. It’s supposed to think about the more basic problems with the Postal Service’s model,” such as declining mail volume, Kosar said.