The Postal Service has been an important American
institution since the birth of the nation. However, its organization and legal
framework have failed to keep pace with changing times. The last institutional
reform of the postal system was in 1970, when the Post Office Department was
replaced by the modern, independent, and “business-like” Postal Service. In
1970, the core mission of the Postal Service was still the timely exchange of
first-class letter communications. Today, although letter mail remains significant,
the primary functions of the Postal Service have shifted to distribution of
packages, advertisements, and other commercial material. In these activities,
the Postal Service operates not as a monopoly supplier of governmental services
but as a part of national distribution network dominated by the private sector
(e.g. private delivery services and advertising media). The 50-year-old
statutory framework does not provide USPS with the tools, incentives, and
flexibility needed to participate successfully in the 21st-century marketplace.

Fundamental reform of the US Postal Service presents a
long-neglected complex intellectual and political challenge. That is in part
because it is difficult to address as the US government is currently organized.
No office within the executive branch is explicitly responsible for development
of policy in postal and related sectors and also possesses the expertise to
develop new legislation. Congress, too, lacks the institutional resources in
postal matters that it once maintained. Today, the main repositories of postal expertise
within the federal government are the Postal Regulatory Commission and the
Government Accountability Office, both oversight agencies not normally used for
policy development. For this reason, past administrations have resorted to
presidential commissions to undertake postal policy reviews, but the last two
commissions (2003, 2018) lacked adequate time or resources to prepare
comprehensive reform proposals.

A glance at the financial position of the Postal
Service makes clear that a top-to-bottom review of US postal laws cannot be
postponed further. In the past decade, the USPS has lost an average of $6.5
billion (or 7.5 percent) each year. In FY 2020 alone, the USPS lost $9.2
billion (or 8.6 percent) on revenues of $73.1 billion. The USPS has been able
to continue operations only by refusing to make various payments to the
Treasury required by law. As of September 30, 2020, USPS owed the US government
$77 billion in loans and unpaid obligations, a debt it is unlikely to be able
to pay. The $97 billion in unfunded pension and health-care liabilities
endangers the Postal Service’s long-term viability.

There is no light at the end of this tunnel. Although in
recent years Congress has considered bills that would grant USPS substantial
funds, these bills have failed to make it to the legislative finish line
because they lack a clear and coherent public policy basis. They bear no apparent
relationship to the conditions leading to USPS’s financial problems and do not
take into account the changing needs of society in the 21st century or the long-term
effects of such subsidies on the national distribution network.

In short, for the new administration the immediate
need is not a proposal for comprehensive postal reform— an impossibility at
this stage — but the means of developing such a proposal. Options include a new
presidential commission, a high-level inter-agency task force, and/or analyses
by independent consultants. Whatever mechanism is selected, the task today is
at least as great as that which faced the Kappel Commission in 1968, whose
report laid the basis for the current postal law. Adequate time and resources
must be made available to allow an in-depth examination of the key issues from
many perspectives, including economic, political, and legal/governmental. In
addition, the expertise of the Postal Regulatory Commission will be critical to
this effort, so the administration should ensure that the commission is willing
and able to provide necessary technical assistance.

R. Richard Geddes is a visiting scholar at AEI and the director of the Cornell Program in Infrastructure Policy. James I. Campbell Jr. is a lawyer and consultant in Washington DC, as well as a long time adviser to Federal Express Corporation on US postal reform and international postal policy.

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