Reforming the Postal Service

With all the information floating around about the U.S. Postal Service's financial crisis and the possible Postal Service default at the end of September, it can be difficult to wade through what is fact and what is fiction. Below are 7 Myths about the current crisis and 7 facts explaining what can and must be done to reform this vital American institution and ensure its services remain for generations to come.

MYTH #1: The U.S. Postal Service is bankrolled by taxpayers.

FACT: The U.S. Postal Service is funded entirely by revenues from postage.

According to the U.S. Postal Service, "The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations."

Additionally, USA Today reported in July 2013 that the Postal Service “does not receive federal assistance, getting revenue from postage sales, delivery services and other products. But mail service has dropped nearly 25% from 215 billion pieces delivered in 2006 to a current volume of 160 billion."

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MYTH #2: The U.S. Postal Service will inevitably see a total financial collapse in the coming months.

FACT: Congress and the Obama Administration have the ability to empower the U.S. Postal Service to operate more like a business by giving postal management more control over decisions about its financial well-being.

By doing this and helping the Postal Service cut costs and generate new revenue, we can prevent  a postal bankruptcy; but if nothing is done to address the current constraints on the Postal Service, it will continue to in its downward spiral. Last year, the Postal Service defaulted for the first time in its history. The Postal Service currently maintains an outstanding debt nearing $15 billion and lacks the operating capital to begin repaying that debt, let alone meet congressionally-mandated payments exceeding $5 billion due to the U.S. Treasury at the end of Fiscal Year 2013.

On August 1, 2012, the U.S. Postal Service defaulted on its obligations for the first time ever. Bloomberg Business Weekdescribed the situation by saying: “The U.S. Postal Service essentially went broke today. It skipped a $5.5 billion payment to the U.S. Treasury for future retiree health-care payments and said it would do the same early next month when another $5.6 billion is due. This comes as no surprise. The USPS has been losing $25 million each day, due in large part to the decline of first-class mail. But the service—which dates back to the days of Ben Franklin—now finds itself in uncharted territory.”

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MYTH #3: Congressional action to save the U.S. Postal Service amounts to yet another government bailout of a failing industry.

FACT: Under current law, Congress has prevented the U.S. Postal Service from making many tough but necessary business decisions on topics ranging from the number of post offices to the frequency of mail delivery to the rollout of innovative new products.

Congress now must stop micromanaging the Postal Service and allow critically important reforms to modernize the Postal Service, streamline its operations, and seek new sources of revenue. We don’t need to bail them out; we need to let this invaluable U.S. institution act like a real company and save itself.

As an August 2, 2013 report by Reuters suggests, the “238-year-old mail carrier is stuck in an outdated business model” that needs to change.

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MYTH #4: The Carper-Coburn Postal Reform Act ends door-to-door delivery.

FACT: The Carper-Coburn Postal Reform Act does not require the Postal Service to end door-to-door delivery.

The legislation seeks to find ways for mail to be delivered in the most efficient way possible, without altering service for millions of residential customers who already enjoy door-to-door service. Using curbside delivery, cluster boxes and other forms of centralized delivery for new addresses and business addresses can be an effective method of accomplishing this goal. For all new addresses and business addresses, the Carper-Coburn bill would require the Postal Service to determine if curbside or centralized delivery is practical. The Postal Service would also be required to, within one year of enactment, review existing residential addresses that receive door-to-door delivery and create voluntary programs to convert those addresses to a more cost-effective method of delivery.  The Postal Service would be permitted to maintain door-to-door delivery for those addresses – whether a new addresses, a business address, or an existing residential addresses- if some other form of delivery is not possible.

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MYTH #5: The Carper-Coburn Postal Reform Act would shut down mail processing facilities and eliminate thousands of jobs.

FACT: This legislation seeks to protect the thousands of jobs supported by the Postal Service by preserving mail processing capacity.

The Carper-Coburn Postal Reform Act would prohibit the Postal Service from closing or consolidating any mail processing facilities for a period of two years.

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MYTH #6: The U.S. Postal Service must raise rates on certain postal products to help cover its losses.

FACT: The U.S. Postal Service needs the freedom to choose the best way to close their revenue gap and get back on a stable financial track, and raising rates could jeopardize the revenues they continue to take in on valuable products like magazines and catalogs.

The Carper-Coburn Postal Reform Act would amend current law to provide the Board of Governors with the authority to establish a system of rates and classes for market-dominant products, such as First Class mail and periodicals that keeps price increases in line with inflation.

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MYTH #7: This bill will end Saturday mail delivery.

FACT: This legislation requires the Postal Service to maintain Saturday delivery for one year after the date of enactment.

This will provide the Postal Service the time needed to reassess its financial situation and determine whether a reduction in service is truly necessary for the long term solvency of the institution. After one year, this bill gives the U.S. Postal Service the freedom to establish its own calendar for delivery. For two years after the date of enactment, the Postal Service would be required to continue delivering packages six days per week and it would be required to provide mailers (such as some small newspapers) that currently have access to customers’ mailboxes on Saturdays and Sundays the same access they have always enjoyed. It would also be required to maintain delivery to post office boxes on Saturdays.

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Twitter

@SenatorCarper: #USPS article by @Reporter_Hicks highlights the impact of postal service closures & need for reform. @WashingtonPost http://t.co/tQuNaUPrjJ 10/13/14 10:08:15 AM
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