Consumers nationwide are struggling in new, alarming ways to manage the economic challenges of price inflation and shortages of necessary goods. Rapid increases in the cost of gasoline, groceries, and other household items have a particularly harsh impact on those with the least wiggle room in their budgets, namely everyday citizens and small businesses.
While the federal government expresses interest in mitigating inflation on one hand, it is also guilty of reaching deeper and deeper into consumers wallets. Case in point: the U.S. Postal Service. Ix`x`
Price increases are just one part of the full scope of consumer impacts, and we must ask serious questions about how and why the Postal Service makes its decisions.
It’s no secret that the USPS has a monopoly on the delivery of mail, including all correspondence, notices, greeting cards, invitations, bills, payments, promotional material, and so on. This fact has unfortunately allowed USPS’ leaders to blatantly take advantage of consumers. Earlier this Spring, the Postmaster General proclaimed that price gouging will go on at an “uncomfortable rate.”
Whether the nation’s lawmakers are aware of it or not, they passed major legislation in March (The Postal Service Reform Act) that will force users of the mail system to pay between $35 billion-$52 billion more over several years. To add insult to injury, the legislation also sets the stage for significant U.S. mail slowdowns. Just weeks after the enactment of the bill, USPS began taking an axe to its delivery network to close and consolidate facilities across the country, including 500 processing locations, 1,000 transfer hubs, and more.
The revenue shifts as a result of the new USPS law do not stop there. The agency has also benefited from about $50 billion in financial relief to significantly draw down its unfunded liabilities that have accumulated over many years. Prior to this, Congress allocated $10 billion to the Postal Service in mid-2020. Another $5.9 billion may also be tacked on to support USPS’ electric vehicle purchases.
Beyond taxpayer implications, a major point of the law is the new “integrated delivery network” provision. The term amounts to a mandate to deliver mail and packages together six days a week, but beyond that, the term is only loosely defined. To the USPS’ detriment, the integrated network fails to assert any semblance of rational accounting procedures to understand how each service is performing financially.
Ordinarily, a firm offering products and services at scale would work tirelessly to examine the data of its ledger and assess which parts of the operation are fruitful and which are dragging the business down. Such evaluations are essential for having confidence in quick corrective actions. In the case of the Postal Service, the integration of networks leaves the institution meandering in managerial darkness and in danger of piling onto its debts that had been in the range of $188 billion according to the Government Accountability Office.
The Postal Service can certainly thank lawmakers, and especially leadership of the House Committee on Oversight and Reform , and the Senate Homeland Security and Government Affairs Committee, for their generosity trimming down these debts using billions of taxpayer dollars. The fiscal relief may buy the Postal Service some time to stay afloat for the months ahead, but the ultimate affect of the law will be wholly dismal. The agency will continue, in perpetuity, to be willingly uninformed about the intricacies of its financial health.
Specifically, the new law means cementing USPS’ preferred system of forcing large shares of costs onto its core letter mail operation for the clear purpose of having the resources necessary to attempt competitive package shipping. After 15 consecutive years of multi-billion dollar losses, it’s clear that the risk and cost shifting hasn’t worked.
The next time Congress examines the Postal Service, let’s hope that they can undo the chaos they created with the Postal Service Reform Act of 2022. A commonsense approach to require USPS to organize its finances will be considerably better than asking consumers and taxpayers to make “uncomfortable” contributions again and again.
Steve Pociask is president and CEO of the American Consumer Institute, a nonprofit research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org and follow us on twitter @ConsumerPal.oes here
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