Preserving the People's Post Office: A Postmaster's View



Under same management: Some reservations about postal banking

March 2, 2014


A recent report by the USPS Office of Inspector General on offering financial services at the post office won immediate support from Senator Elizabeth Warren, and postal banking was thrust into the limelight.  A big front-page story in Huffington Post entitled “Breaking the Banks” by Elizabeth Swanson offers polling data (and a poll of its own) that shows 44% of Americans favor letting the Postal Service getting into the banking business.  After the president’s State of the Union message, David Dayen, writing in the New Republic, suggested that President Obama use his executive powers to order the Postal Service to consider postal banking.  Dayan has another piece in Salon about how postal banking could even "save the economy."

While some news sites have been touting the idea as a way of saving the Postal Service, others have dismissed the idea as government overreach.  The division of opinion falls along fairly predictable ideological lines, with the Left largely in favor and the Right mostly opposed, although as recently as last August Reihan Salam of the conservative National Review was touting the idea of postal savings accounts.

As many of the news articles and op-ed pieces point out, postal banking is not a new or very original idea.  The old Post Office Department offered savings accounts up until the early 1960’s.  Japan’s largest savings bank operates out of the post office, and many other foreign postal systems offer some form of financial services or banking.

In several pieces here on Save the Post Office, I’ve suggested that the postal network would provide an excellent platform for limited banking services, like small savings accounts, check cashing, electronic bill presentment, and payment systems.  These services could bring the unbanked and the underbanked, as well as those with marginal or no access to the Internet, into the 21st-century economy.  In many ways those kinds of services are a natural fit with a postal network oriented to public service.  

Done properly, offering basic financial services through the postal network would be attractive and beneficial, not just to those at the bottom of the economic spectrum but also to many in the middle class as well.  An initiative like this could be a wise way to preserve and expand our existing postal assets while preserving hundreds of thousands of good postal jobs.

Considering that I myself have been a proponent of postal banking, I hate to throw a wet blanket on the idea.  The proposal has gained tremendous traction and gotten many people excited, but there are just too many reasons to be skeptical.  Given the current structure of the Postal Service, the mindset of its leadership, and the attitudes and expectations of politicians in both Congress and the Administration, a move towards postal banking would not only be unlikely to save the Postal Service and the postal network, but it could also turn out to be as abusive and harmful as the current landscape of payday lenders and predatory banks.  The last thing we need right now is for the Postal Service to try to balance its books by extracting billions of dollars in fees from some of the most financially vulnerable folks in society.  That’s not the way to save the post office.

Premature motion: PRC dismisses bid to view non-public Amazon docs

February 13, 2014


Almost three months ago, I filed a request with the Postal Regulatory Commission seeking access to documents filed under seal in the docket that dealt with the Postal Service’s deal with Amazon to deliver its parcels on Sundays.  Last week, the PRC finally responded to the request. 

The Commission ruled that my motion was “dismissed without prejudice” as being “premature,” meaning I could resubmit the request again when the time was ripe — sometime next year.  I was also advised to confer with the Postal Service and Amazon "in an effort to resolve the request for access in a mutually agreeable fashion."  The Postal Service and Amazon had both filed briefs vehemently opposing my request, but somehow we were supposed to confer together and thereby "resolve the dispute without court action."  

This seems like a strange way to respond to a request for access to non-public documents, and the whole story illustrates the disturbing lack of transparency in how the Postal Service conducts its business — and with PRC approval to boot. 

The Senate puts the PRC in the backseat — or maybe not even in the car

February 9, 2014


On Thursday of this past week, the Senate held the second of two markup sessions on the postal reform bill, a.k.a. the manager’s or substitute amendment, submitted by Senators Carper and Coburn.  At the first session held the previous week, on January 29, a controversy arose over Section 301 of the proposed bill, which deals with postal rates and the role of the Postal Regulatory Commission.  The controversy resumed on Thursday.  

As originally proposed in the manager’s amendment, Section 301 does several things.  First, it takes the exigent rate increase that the PRC approved on a temporary basis and makes it the new base line.  The bill thus essentially overturns the PRC’s ruling in December and makes the 4.3 percent increase permanent, rather than limiting it to the time frame required to bring in $2.8 billion in profit (about 18 months to two years).

Section 301 also raises the current limit on annual rate increases from the CPI to the CPI plus one percent.  That would all but guarantee higher annual rate increases over the next few years.

In addition to dealing with these two specific rate matters, Section 301 transfers much of the responsibility for setting postal rates in the future from the PRC to the Postal Board of Governors.  The PRC’s role would be reduced to reviewing the BOG’s decision after the fact, rather than approving increases before they’re implemented. 

Finally, Section 301 gives the BOG the primary role in a 2017 rewrite of the ratemaking system.  The PRC can have some input and it will be able to veto the revision, but that's about all.

As Senator Carper explained at Thursday's markup, he and Senator Coburn decided to give the PRC "a very minimal role in terms of actually deciding what that new rate structure would look like" in the 2017 rewrite.  "We really put the Postal Service in the driver’s seat.  I don’t even know if the PRC was in the car, but certainly the Postal Service was in the driver’s seat.”  (video at 2:03:40)

Can it get much worse? The Senate tries postal reform, again

February 3, 2014


The Senate Committee on Homeland Security and Government Affairs finally took up its postal reform bill at a markup session on Wednesday, January 29.  The new S.1486 the committee took up is significantly different from the Carper-Coburn bill released last August.  The current version, aka the substitute bill or the managers’ amendment, has introduced changes to the rate system, regulatory oversight, and facility closings that are worth close scrutiny.

The leadership of the Postal Service has expressed satisfaction with the new substitute bill.  No wonder.  It reads like the fulfillment of PMG Donahoe’s and the Board of Governor’s wish list.  It grants them new powers over ratemaking, adds language regarding contract negotiations favorable to management, and creates a separate postal employee health plan within the current Federal Employee Health Benefit Plan (FEHBP).  The bill also addresses the retiree health benefit prefunding, while adding a new prefunding requirement for workman’s compensation.

Whatever its final form, the postal reform bill that comes out of the Senate will represent the next step in a process that has been going on since the Postal Service was created in 1971.  For the last forty years the leadership of the Postal Service has pursued a course that treats the postal network in terms of a corporate business model that simply provides a delivery service.  Postal leaders do not seem much interested in the view of the postal system as basic national infrastructure that connects American homes and businesses with each other and with their government.  They do not seem very committed to a broad vision of the universal service obligation.  They do not seem to understand what our Founders grasped so clearly — the important role of the postal network as a fundamental element of democracy, furthering access to information and creating connections in a way that bound the nation together.  

The Privatization Ruse

January 24, 2014


Accusations that the PMG’s ultimate goal is to privatize the Postal Service are apparently starting to make some of the folks at L’Enfant Plaza a little touchy.

On January 17, the Washington Post ran a story about the new postal counters in Staples that included a quote from Senator Jon Tester of Montana: Donahoe “can say whatever he wants but I think he wants to privatize.  And I think there’s plenty of people in Congress who agree with that. I don’t.”  

This isn’t the first time Senator Tester has expressed skepticism over the intended direction of the Postal Service.  In two hearings held a week apart last September, Senator Tester expressed much the same opinion.  At the hearing on September 19, the senator opened his questioning of the PMG like this: “I would say that if the goal is to privatize the Postal Service, then we ought to have a bill to do exactly that and move forward.  I think it would be a mistake, but nonetheless we ought to have that debate.”

Postal News Blog recognized the significance of Senator Tester’s remark in the Washington Post article and made it the headline of a blog post.  That in turn provoked David Partenheimer, Manager of Media Relations in the Corporate Communications department of the Postal Service, to post this comment on Postal News: “Privatize? Nonsense.  The Postal Service has no intention to seek privatization.” 

Mr. Partenheimer then proceeded to explain that initiatives like providing postal counters in Staples were solely about access.  He also pointed out that the Postal Service lost $5 billion last year, neglecting to mention that operations were profitable and that the loss was solely the result of the retiree healthcare burden.  Mr. Partenheimer then suggested that the onus was on Congress “to pass comprehensive legislation to provide a long-term solution to our financial challenges.”

This is the first time in my memory that a senior Postal Service official has chosen to participate in the comment forum on a blog.  Not that the Postal Service has been shy about getting its views out into the press.  For example, we regularly see letters from District Managers in local papers promoting various Postal Service talking points.  

And this isn’t the first time Mr. Partenheimer has responded to things he’s read on postal websites.  He contacted Save the Post Office a while back, having taken umbrage at how POStPlan community meetings had been characterized as a waste of time.  Mr. Partenheimer tends to see the Postal Service’s intentions and actions through rose-colored glasses.  But what else would you expect from a corporate PR professional?

Thinking inside the PO Box

January 17, 2014


On January 26, postage rates are going up — about 6 percent across the board, which means a First Class stamp will go from 46 to 49 cents.  But there's another rate increase going into effect on that day, and it hasn't gotten much attention.  

Three weeks ago, deep in the back of the December 26 issue of Postal Bulletin (on page 69), the Postal Service announced that it was raising the fees on post office boxes at some of its post offices.  Depending on the size of the box and the fee group, the new rental prices for a six-month period will range from $16 to $625. 

The new fees are within a range previously approved by the Postal Regulatory Commission back in December 2011, so they do not need any additional approval, and the Postal Service simply informed the PRC of the new fees in a letter on December 27.

Raising rates on boxes at just some post offices is actually a relatively recent event.  Historically, box rates were considered market-dominant products and subject to rate caps. That changed a couple of years ago, though, when some 6,800 postal facilities were classified as “Competitive Post Offices.”  At these offices, the Postal Service could charge higher fees than at its “regular” post offices. The Postal Service also added some service enhancements for these competitive boxes.

The issues surrounding fees for PO boxes are rather arcane, and the story of how the PO boxes at some offices came to be categorized as competitive is not likely to make headlines.  But PO boxes are an important part of the postal infrastructure, and what happens to them is inextricably tied to what’s happening to the rest of the Postal Service infrastructure of post offices, processing plants, historic buildings, vehicles, and workforce.  To understand the significance of what's going on with PO boxes, it helps to start with a little history.


From Kappel to PAEA

In June of 1968, the President’s Commission on Postal Organization — the Kappel Commission — issued its report, “Towards Postal Excellence.”  Its primary conclusion was that the executive departments of the federal government were “inappropriate” for the Post Office, and it recommended instead that Congress charter Government-owned Corporation to operate the postal service.

The Postal Reorganization Act of 1970 implemented the Kappel Commission’s recommendation. It changed the Post Office Department into the Postal Service while moving it from its status as a cabinet agency to a semi-corporate entity owned by the government.

For the next three decades, mail volumes grew — from 50 billion pieces of First Class mail in 1970 to over 103 billion by 2000 — and so did the workforce —  from  550,000 career employees in 1970 to nearly 800,000 in 2000.

Even as the Postal Service was growing, the leadership of the Postal Service, as well many in Congress, were envisioning a downsized Postal Service with a significantly smaller footprint.  That was precisely the point of then PMG Jack Potter’s 2002 Transformation Plan

Potter argued that the appropriate response to encroaching technologies was to treat postal infrastructure as unnecessary and overbuilt industrial capacity.  Rather than adapt, modernize, and find alternate uses for valuable postal infrastructure, the Transformation Plan envisioned a future environment that would jettison much of the retail network and shrink the mail processing network by using workshare discounts to transfer much of the work to the private sector.

A New Year’s Resolution: Support the People’s Post Office

January 1, 2014


Here’s a resolution for the New Year: Support the people’s post office.  

That means working to preserve an essential national infrastructure and rejecting initiatives to dismantle it, like closing post offices and cutting window hours, delivering the mail fewer days of the week, and converting customers to cluster boxes. 

It means working to ensure that the post office continues to be a good place to work — with job security, decent wages, and good benefits — and remembering that the post office provides jobs to thousands of veterans, minorities, the disabled, and women.

It means doing your postal business at your local post office, not some Village Post Office or the postal counter in Staples, and it means challenging workshare discounts, outsourcing, and all the other forms of piecemeal privatization.  

It means demanding more transparency in how the Postal Service conducts its business, questioning secret negotiated service agreements, and taking the universal service obligation seriously.

Supporting the people’s post office means fighting back against those who want to plunder and corporatize the Postal Service for their own self-interest and use it as a tool for enhancing their wealth at the public expense.  And it means calling out those who care more about the postage rates they pay than the health of the postal system and the good of the country. 


The rate increase

Later this month postal rates are going up by 6 percent.  That may make things hard on some mailers, like community newspapers, news magazines, and non-profits.  But the Great Recession has taken a huge toll on the Postal Service, and the rate system is set up to permit such increases when "exceptional circumstances" require it.  The Postal Regulatory Commission therefore determined in 2011 that an exigent rate increase was justified.  It was just a matter of how big or small it would be.  It turned out to be very small indeed. 

The Postal Service presented convincing evidence showing that from 2008 through 2014 the recession had cost it nearly $40 billion in profits, which easily justified the 4.3 percent increase it was seeking.  (Another 1.7 percent increase was already permitted under the price cap.) That increase would have generated about $1.8 billion a year, money that could have been used to maintain and improve the postal infrastructure.

The mailers argued that the recession had cost the Postal Service more like $1 billion, not $40 billion, and they thought a one percent increase for just two years would be sufficient.  That would have generated only about $700 million and done almost nothing to help the Postal Service’s financial situation. 

In the end, the Commission granted a 4.3 percent increase for about 18 months, or until the increase has generated $2.8 billion.  That may help address the liquidity problem, but it won’t do much to help maintain the postal system.  

The ruling was obviously much closer to what the mailers were willing to give than what the Postal Service was asking for, so the mailers came out fine.  They weren’t satisfied, though, and they immediately started complaining. 

Why I did it and what’s at stake: Shining the light on NSAs

December 3, 2013


A couple of weeks ago I filed a motion with the Postal Regulatory Commission requesting access to the documents related to the Negotiated Service Agreement (NSA) on the program to deliver Amazon parcels on Sundays.  As I write this, the PRC has not yet ruled on my request, but regardless of what happens, I hope a useful purpose will have been served. (There's more about the motion and the oppositions filed by the USPS and Amazon in this post.)

In making this request and writing about it, I hope to draw attention to the PRC cases that administer the competitive products list and review new NSAs.  The Postal Accountability and Enhancement Act of 2006 has long been vilified as the major source of the Postal Service’s problems because it mandates $5.5 billion in annual payments for the prefunding of retiree health benefits, which has been the major cause of the losses reported by the Postal Service since 2007.  I would suggest, however, that in the long term, the most damaging and dangerous part of the PAEA was the separation of the Postal Service’s activities into categories of market-dominant and competitive products.

For those who view the activities of the Postal Service as a public service and the postal network as part of our nation’s infrastructure, the language of the PAEA ought to be seen as troubling.  Since the Postal Reorganization Act of 1971, there’s been a push to make the Postal Service more businesslike.  For many, the term “businesslike” was intended simply to mean “efficient,” and there was no reason to question the virtue of efficiency, but there were others, including the leadership of the Postal Service and majorities in both parties in Congress, who took the language quite literally:  The Postal Service was to become more of a business, with its behavior and incentives guided by a corporate mindset and perspective.

By viewing the service of delivering mail in terms of commercial products, the concept of the postal network as a form of open-access infrastructure was replaced by the idea of the Postal Service as corporate entity.  The goal of managing and regulating the Postal Service shifted away from maintaining an efficient, cost-effective means of delivering an essential public service.  The goal instead became restraining the conduct of a corporate monopoly.

Dividing postal products into market-dominant and competitive products further undermined the notion of the Postal Service as a provider of a public service.  The division codified the view that some aspects of the Postal Service were extraneous to its public service mission and existed solely to compete with private sector offerings and presumably earn profits.

The problem with this view is that it quickly undermines any rationale for public service, replacing it with a full-speed-ahead approach towards turning our nation’s postal network into little more than a business proposition.  Placed in a situation of serving two distinct and often opposing missions, policy makers and postal leadership have not surprisingly taken the easier road of defining the Postal Service as a profit-seeking enterprise. 

A public service mission is difficult to fulfill.  It requires constant evaluation, assessment, and institutional self-examination.  Defining efficiency and success in a public service is much more complex than the more clear-cut metric of profitability in a business enterprise.  A business can content itself with measuring success in dollars and cents, whereas the success of a public service is measured, at least in part, by intangibles like enhancing social value, maintaining community identity, and promoting universal service and access.  These measures may be less concrete than profit, but they are certainly no less valuable.

We don’t ask our national parks to make money, and we don’t ask them to cover their costs by generating sufficient revenues in access fees.  NASA and the NIH aren’t required to turn a profit because we recognize that basic research and the intellectual property it generates return tremendous value to our society.  We don’t make our interstate highways toll roads nor do we limit them to only the highest populated areas.  We realize that a transportation network offers opportunity that results in enhanced economic potential.  And we don’t ask our military to break even.  We consider defense of the Republic to be an essential public service.

We understand that these infrastructures and the services they provide are useful and productive.  We don't expect them to be accountable in terms of profits and losses.  We are wise enough to recognize that the benefits they provide cannot be calculated in the terms of a ledger sheet.

For some reason, however, many people believe the case of the Postal Service is different.  Because paying postage fees for using the postal system is taken for granted, we have been led to believe that the entire value of our postal infrastructure is limited to the fees it generates.  It clearly isn’t.  

What Would JFK Do? The Yale Commencement Address

November 26, 2013


For the past couple of weeks, the media have focused, almost obsessively, on the assassination of President John F. Kennedy, November 22 being the fiftieth anniversary of his death.  I found myself wandering through some of JFK’s speeches and came across his commencement address at Yale University, delivered on June 11, 1962.

In this speech President Kennedy focuses on three questions — the size and shape of government’s responsibilities, public fiscal policy, and confidence in America.  In all three areas, he says, “there is a danger that illusion may prevent effective action,” and his speech seeks to distinguish myth from reality and to “separate false problems from real ones.”

As I read the president’s words, I saw obvious parallels to the situation we find ourselves in today, particularly with respect to our approach to solving the problems of the Postal Service.  While we choke a great national institution and an essential piece of our infrastructure, trying to force it into a mold it can never fit, we also eliminate hundreds of thousands of jobs, dismiss opportunity for future generations, and, worst of all, abandon the basic principles of our country’s founding.

The populist demagoguery of the Tea Party enflames Republicans to rhetoric that portrays government as bad.  The result is predictable — bad government.  Most Democrats are not much better, seeing government as the handmaiden of corporate America, forgetting that this country is more, much more than a series of stakeholders and special interests.  We may be a melting pot of people and interests, but the whole has always been greater than the sum of those parts — something we seem to have forgotten.

In this speech President Kennedy talks about the myths that obscure reality.  He questions the myth of big government and, by implication, the related myth that government ought to be more like business.  He takes on myths of budget and fiscal deficits, the very ones that drive our thinking today, like the myth that taxpayers would rather see government operations privatized than pay for them, which is used to excuse the expropriation of public services and goods.  He also speaks passionately of employment, full employment, as the engine that drives our economy.

The problems of the 1960’s are not the problems of today.  In many ways, we have regressed to 1929, or perhaps to an even earlier time, the Gilded Age of the 1890s.  Though our problems may be different today than the one’s President Kennedy discusses, they are not all that dissimilar.  I have argued in many posts here on Save the Post Office that the problems facing the Postal Service and the proposals to solve them are a reflection of our greater economic problems and the way we have approached them.  Millions are without employment, yet we cut hundreds of thousands of jobs.  Our infrastructure crumbles, and our approach is to privatize it.  Our safety net is shredded leaving millions more vulnerable, and our answer is demand even further cuts.  Wages and opportunity are stagnant, yet an increasingly small number of us are doing quite well, demanding and taking an ever-greater slice of the economic pie.

President Kennedy ends his speech with a call to arms.  I don’t believe it is the same cynical and nihilistic call that drives much of our political discourse today — the call of “I’ve got mine so cut everything and everyone that is not of direct benefit to me."  In his inaugural address President Kennedy asked us to remember country and community.  It is past time that we began rebuilding this country, our economy, our infrastructure, our confidence, and yes, our Postal Service, in ways that benefit the great mass of Americans and the communities they live in — that should be our call to arms.

We would do well to listen and reflect upon these words of President Kennedy.  Here’s what he told the graduating class that June day.  (Some introductory and miscellaneous remarks have been edited out.  The full text can be found here, and an audio version of the speech can be found here.)


The path to postal nirvana: An entitlement program for the mail industry

October 15, 2013


The postal monopolies have been the subject of much discussion recently.  In last month’s Senate hearings, Senator Tom Coburn of Oklahoma offered his view that the monopolies weren’t worth much anymore so the Postal Service doesn’t need much regulatory control.  In the same hearing, Ruth Goldway, Chairman of the PRC, expressed concern that eliminating or modifying the price cap regimen for setting rates would be a serious concern in view of the Postal Service’s continued monopoly position with respect to market dominant products.  In her confirmation hearing for reappointment as a PRC Commissioner, Nanci Langley added her concerns about the ability of the Postal Service to abuse its monopoly powers.

The media has been full of comments and press releases from various mailers groups and lobbying organizations regarding the exigent price increase requested by the Postal Service.  Most of these groups express dismay at the thought of a price increase but also at the idea that the Postal Service would abuse its market dominant position if allowed to raise rates outside of the CPI price cap.  


The road to perdition

One of the loudest voices has been that of Gene Del Polito, president of the lobbying group PostCom.  In a recent commentary, Mr. Del Polito takes Senator Coburn to task for his remarks about the postal monopoly and then goes on to chide every member of Congress who deviates from the Gospel According to Gene.

“One could say there are two roads to postal reform,” writes Mr. Del Polito.  “One is a narrow and winding; the other is a road that’s broad, well-paved, and straight. One leads to postal nirvana; the other to postal perdition.”

Mr. Del Polito’s idea of postal nirvana is one in which rates are kept low for the benefit of mailers — at the expense of infrastructure, postal workers, communities, and consumers.  Giving the Postal Service the authority to set prices without outside regulation, on the other hand, would take us down the road to perdition and expose us to all the evils associated with an unregulated monopoly.

Mr. Del Polito tends to get abrasive in his criticisms of those who disagree with him, using terms like “knotheads” and “socialists” to describe people (like me) who view the postal network as a piece of national infrastructure that must be protected for the sake of the many rather than the few.  Ironically it’s Mr. Del Polito’s sense of entitlement — his view that a few large mailers should be provided with artificially low rates and unnecessary discounts — that smacks of what economist Joseph E. Stiglitz describes as “America’s socialism for the rich.” 

A few modest proposals concerning the rules on post office closures and appeals

September 27, 2013


The Postal Regulatory Commission recently dismissed two appeals on post office closings — Freistatt, Missouri, and the Franklin Station in Somerset County, New Jersey.  Both appeals were dismissed because they were filed late – in both cases, less than a week after the deadline.

There’s no question that the PRC has rules of procedure that it must abide by, but it frequently grants extensions to deadlines, more often than not to the Postal Service.  The PRC’s rules of procedures and the regulations that govern post office closings can be tough to sort through, especially for the average citizen who might not be familiar with bureaucratic and legal language.

For its part the Postal Service doesn’t make it easy on folks who wish to appeal the closing of a post office.  If the post office is a station or branch, the final determination doesn’t even mention that the community has a right to appeal to the PRC.  That’s because the Postal Service believes that only independent post offices are permitted to appeal, even though the Commission regularly hears appeal on stations and branches.

There are other problems with the discontinuance notices.   In Freistatt, because the post office had been suspended, two discontinuance notices were posted in post offices several miles away, and a third was taped to the back of a cluster box unit that replaced the post office.  In some cases the Postal Service has failed to produce a complete administrative record documenting the discontinuance process; in a few cases, there was more than one version of the discontinuance notice, and they contained conflicting information.

The appeals process could be made fairer for communities if there were a few simple changes in the discontinuance procedures that the Postal Service follows and in the process that the PRC uses to review appeals.

Shades of deception: The PMG testifies to the Senate

September 26, 2013


The Senate held another hearing on the Postal Service on Thursday, September 19.  The hearing was titled: “Outside the Box: Reforming and Renewing the Postal Service, Part I – Maintaining Services, Reducing Costs and Increasing Revenue Through Innovation and Modernization.”  Part II, scheduled for today, Thursday, September 26, promises to address workforce issues.

The first hearing didn’t break any new ground, let alone escape any boxes.  It did offer some interesting testimony from the OIG, David Williams, and there were a few interesting exchanges, but like most Senate hearings, it was a fairly scripted event with panelists giving written testimony and senators asking many of the same old questions.  There was one brief exchange between Senator Coburn of Oklahoma and the Postmaster General Patrick Donahoe that’s worth noting.

The exchange, which comes at about the one hour and eight minute mark of the hearing, involves a question from Senator Coburn and an answer by PMG Donahoe.  (The video is here.)  They are discussing the impact of labor on costs.

Senator Coburn: It is presently the law that an arbitrator cannot consider the financial health of the Postal Service in arbitrating a contract. Is that correct?

PMG Donahoe: That is correct.

What could be simpler and more direct?  The senator asks a question and the PMG responds, “That is correct.”

The problem here is that the senator offered a false premise— in point of fact, arbitrators can consider the financial health of the Postal Service — and then Mr. Donahoe confirmed the senator’s premise.  The PMG thus gave false testimony in a Congressional hearing.

What we have here is a failure to communicate: Learning from Jekyll Island

September 24, 2013


On September 12, we reported this story on Jekyll Island, Georgia, where the Postal Service apparently attempted to end delivery service for the island’s residents and businesses in exchange for maintaining a post office.  The island is owned by the state and administered by the Jekyll Island Authority.  The attorney for JIA in charge of negotiations with the Postal Service thought the post office might be closed and trading away home delivery was the best way to keep it open.  Many people in the community disagreed and argued that JIA had no right to make this tradeoff.

In an undated letter delivered to Jekyll Island residents on September 18, the Postal Service reversed course and announced that both delivery service and the location and hours of the present post office would remain the same, at least for now.

The letter, signed by USPS District Manager Charles J. Miller, begins by saying: “There has been some misinformation recently circulating in your community regarding the future of mail delivery service on Jekyll Island.”

The misinformation Mr. Miller refers to began when the JIA circulated a letter indicating that the JIA had decided, after discussions with the Postal Service, to trade the residents’ current city delivery for guarantees that the island would continue to have a post office, which will soon relocate to space the JIA owns in the island’s historic district.  Those discussions were laid out in a series of e-mails between Chris O’Donnell, the JIA attorney, and Damian Rawski, postmaster for Brunswick, Georgia, the office that administers mail service on Jekyll Island.

The announcement of the proposed trade-off stirred local residents to action and generated news coverage by the Jacksonville-based Florida-Times Union as well as Save the Post Office.  Officials at the USPS North Florida District in Jacksonville did not respond for requests for clarification from STPO, and they told residents that they had no knowledge of the negotiations between Mr. O’Donnell and Postmaster Rawski, even though a chain of e-mails indicates that Frank Stephens, Manager of Operations Programs Support, was cc’ed throughout.  In the letter from Mr. Miller, Mr. Stephens is also listed as the postal contact for any questions the residents may have.

Still left unresolved is the ultimate fate of the post office on Jekyll Island.  The office is currently housed in a temporary trailer with a lease running through May of 2014.  The JIA has indicated that the temporary trailers, which also house other Jekyll Island businesses, will be removed after a new shopping center is completed.  In a meeting of the JIA on Monday, September 16, C. Jones Hooks, the executive director of JIA, stated that the authority would leave the matter of delivery up to the Postal Service, according to Bonnie Newell, a resident who attended the meeting.  No mention was made of the JIA’s previous offer to house the post office in the historic district.

It appears for the moment that the issues on Jekyll Island have been resolved by maintaining the status quo.  That’s good news for the folks on the island, but what happened on Jekyll Island illustrate several problems with how the Postal Service operates, and it’s not good news for those concerned about the future of postal services in this country.


The Postal Service has a brand new bag: A post office or mail delivery, but not both

September 12, 2013


Off the Georgia coast just above the Florida border lies Jekyll Island, a popular tourist destination that boasts a beautiful beach, a historic district, and the Georgia Sea Turtle Center.  A couple of hundred miles up the road is Augusta, Georgia, where the Godfather of Soul, James Brown, grew up.

The Postal Service has a new strategy for providing postal services to Jekyll Island that might best be described as a version of Brown’s early hit “Papa's Got a Brand New Bag.” The Postal Service "ain't too hip now" but it's got a new bag, too.  It wants to end door delivery for the nearly nine hundred homes and businesses on Jekyll Island and instead have everyone go to the post office to pick up the mail.  According to postal regulations, the Postal Service can't change a customer's mode of delivery without permission, but that's not how it's going down on Jekyll Island.

The island is owned by the state of Georgia, and it is administered by a state board called the Jekyll Island Authority (JIA). The residents of the island own their homes, but they lease the land on which their houses sit.

The island is served by a small branch of the main office in Brunswick, on the mainland, over twelve miles away and on the other side of a six-mile causeway.  The office is currently open just four hours a day (9 a.m. to 1 p.m.).  For many years the Jekyll Island post office was housed in a retail mall, but when that mall was torn down, retail services were moved to a trailer.  The rent on the original facility was $10,500 per year, but the JAI didn’t charge the Postal Service any rent at all on the trailer.

The homes and businesses on Jekyll Island receive mail delivery from two city routes that originate in Brunswick.  Mail is addressed to individual street addresses and bears a Jekyll Island zip code – 31527.  Currently the carriers deliver to the door – a mode of delivery that has been around for as long as anyone on the island can remember.

The JIA has been constructing a new retail shopping center in the historic district at the south end of the island.  It is a small area serviced by a few small roads, and according to residents, it's mainly frequented by tourists.  After the new shopping center is completed, the temporary trailers that have been used since the old mall was taken down are going to be removed.  The JIA has offered the Postal Service a place for a new post office in the new mall.

According to this article in the Florida Times-Union and other documents, at some point in the discussions between the USPS and the JIA, the scope of the negotiations expanded beyond the topic of the new post office.  It appears that the Postal Service suggested — or at least implied — that it would close the Jekyll Island post office unless the residents agreed to give up home delivery.  The Postal Service isn’t talking, and the attorney for JIA, Chris O’Donnell, has offered varying accounts, but that seems to be what happened.

According to Mr. O’Donnell, the JIA — fearing that the community might lose its post office — reached an agreement with the Postal Service to give up home delivery in exchange for a new post office in the tourist-oriented historic district.  The Postal Service will pay a nominal $2,700 per year in rent.  

The new facility is supposed to be sort of old-timey to fit in with the character of the historic district.  It will have fancy brass boxes, a special postmark, and other “vintage” design features.  

It isn’t clear who is going to pay for all of this.  Mr. O’Donnell says he has the deal in writing, but he hasn’t offered it for inspection, and the JIA has not responded to my FOIA requesting documents related to the negotiations. Originally Mr. O’Donnell indicated that the deal included keeping delivery to the island’s businesses, but he has since backed off that assertion.

In several of his statements to the press, in the FAQ page describing the deal, and in an email responding to a resident’s questions, Mr. O’Donnell has sometimes sounded like he was reading a set of Postal Service talking points.  He refers to legislation in Congress that would eliminate home delivery, but it’s not clear which legislation he’s referring to, and there's a big difference between proposed legislation that may never be enacted and the current statutes and regulations.  

The Postal Service certainly hasn’t been shy about pressing for changes in modes of delivery across the country.  In most cases, it would prefer cluster boxes to door or curb delivery because centralized delivery costs less.  But according to current postal regulations, the Postal Service can’t change a customer’s mode of delivery without the customer’s permission.

The PMG has a bridge to sell: The GAO report on the Postal Service healthcare plan

August 30, 2013


One of the cornerstones of PMG Pat Donahoe’s plans for the Postal Service is the transfer of postal employees and retirees from the Federal Employee Health Benefit Plan (FEHBP) into a plan run by the Postal Service itself.  Mr. Donahoe has assured everyone that a Postal Service plan would offer the same level of benefits at similar or even cheaper cost to employees and retirees while saving hundreds of millions of dollars for the Postal Service.

The General Accountability Office (GAO) recently released a report evaluating the Postal Service proposal.  The report (GAO-13-658) is entitled  "U.S. Postal Service: Proposed Health Plan Could Improve Financial Condition, but Impact on Medicare and Other Issues Should Be Weighed before Approval."  The GAO examines the components of the plan, potential costs for premiums and out-of-pocket expenses for those covered by the plan, some of the legal and legislative pitfalls involved in making the switch, and potential costs to other entities such as Medicare and the Office of Personnel Management (OPM).

The GAO report considers various aspects of the proposal and what it would do, but it also helps raise some important questions about institutional prejudice and how economic numbers and issues get reported. It’s worth taking a look at the Postal Service Plan, the GAO report, and some of those larger issues.  First let’s look at the Postal Service Plan (PSP) itself.

Christmas for Pat: A heartwarming tale in which everyone gets what they want — and then doesn’t

August 25, 2013


You’ve got to be very careful if you don’t know where you’re going because you might not get there. – Yogi Berra

It’s August and Congress is on its annual five-week summer break.  Despite statements by folks like Senator Tom Carper and Congressman Darrell Issa, we don’t seem to be any closer to postal reform than we’ve been for the last three years.   Back in January, Senator Carper, who likes to use sports analogies, summed up the state of postal reform with a football metaphor: “I think we narrowed our differences….  In terms of negotiations, we’re in the red zone.”

Maybe we should switch sports to baseball.  Rather than the game being almost over, it looks like we’re in for an extended rain delay.  Very extended.


Christmas in August

When Congress returns from its break, it will have a lot to deal with besides postal reform.  First off, it will need to take up the spending bills that fund the government for the next fiscal year, beginning October 1.  That’s likely to degenerate into another protracted battle.  Some of the more radical Republicans, like Senator Ted Cruz, have insisted that threatening to shut down the government would be a perfect opportunity to eliminate the Affordable Care Act.  It’s likely the House and Senate will spend precious time arguing back and forth before they come up with a continuing resolution to keep the government going.

Also looming on the horizon is another battle over the debt ceiling.  Who knows how much time that will waste? There are probably a few surprises on the horizon that will manage to chew up a few more news cycles.  Before you know it, it will be time for Congress to take its traditional Christmas break.

Maybe by Christmas time Pat Donahoe and his friends on the Board of Governors will have brought this postal crisis to a head.  CFO Joe Corbett keeps repeating his dire warnings about the Postal Service running out of cash.  With the threat of an exigent rate increase being bandied about the industry, apoplectic lobbyists will be making sure every contribution counts.   These days nothing is more likely to focus a Congressman’s or Senator’s attention than the promise of a contribution or the ability to proclaim himself or herself a hero for saving the public from another dreaded bailout.

So let’s pretend it’s Christmastime in Postal Land.  Let’s pretend that the PMG has been a good boy all year, and Santa Darrell and St. Nick Carper are ready to bring him all the goodies he wants.  What exactly does Pat want for Christmas?


The PMG’s wish list

Well, a good place to start would be his testimony before Issa’s Committee on Oversight and Government Reform on July 17, 2013. During that testimony the PMG referred to the Postal Service’s Five Year Business Plan and offered these eight points to bring the Postal Service back to profitability:

  1. Create independent USPS Health Care Plan (resolves Retiree Health Benefits prefunding issue)
  2. Refund FERS overpayment and adjust future FERS payments
  3. Curtail delivery frequency (Five-day mail/Six-day packages)
  4. Streamline governance (eliminate duplicative oversight)
  5. Provide authority to expand products and services
  6. Require defined contribution retirement system for future postal employees
  7. Require arbitrators to consider financial condition of Postal Service
  8. Reform Workers’ Compensation

That may seem like quite a list, but much of it coincides with the various plans and wish lists promoted by lobbyists like PostCom and GCA.  In many ways it also coincides with the Pitney Bowes/NAPA plan for partial privatization of the Postal Service.

All of these so-called reforms are aimed at shrinking the Postal Service’s retail network, a continued consolidation of the mail processing and delivery network, and perhaps changes in mode of delivery, moving away from door and curb delivery towards cluster boxes.

Five of the items on the list are directly focused on the postal labor force.  Donahoe has continually insisted that changes in the labor force, like moving to a part-time flexible force with lower wages and benefits, is a necessary step.  One of the most oft repeated facts about the Postal Service is that labor makes up 80% of its costs. This is cited as a negative, and Donahoe and the BOG have consistently argued that postal workers and the wages and benefits they receive are one of the main, if not the main, sources of the current problem.

Donahoe is also asking for a reduction from six-day to five-day delivery. He’s modified his earlier proposal to totally eliminate Saturday delivery, most likely in response to overwhelming evidence that the loss of a delivery day for packages would harm future revenue prospects and denigrate service.

Donahoe also asks for more freedom from his regulator, the Postal Regulatory Commission, along with more freedom for his governing board, the BOG.

The PMG has also asked for additional authority to move into other products and services.  The management of the Postal Service has been laser focused on the mailing industry for the last ten years or more.  Virtually all of the innovations the Postal Service has engaged in have been designed to enhance the effects and prospects of direct mail advertisers. 

Other types of innovation, like those that might help average citizens, are not on the agenda.  Donahoe has dismissed calls for the Postal Service to move into small banking services as a complement to its money order business.  He has argued that developing cooperative arrangements to use the postal network to assist state and local governments or other Federal agencies would not be remunerative.  So “other products and services” would likely mean things like more discounts for mobile barcodes and perhaps the delivery of beer and wine.

Fiasco in Freistatt: How the Post Office Became a Cluster Box

August 20, 2013


The Postal Service didn’t think the folks in Freistatt, Missouri, should have a post office, so they closed it.

The Postal Service didn’t think the folks in Freistatt, Missouri, should get rural carrier delivery like their neighbors, so they tricked the town into accepting cluster boxes.

Now the Postal Service doesn’t think the folks in Freistatt, Missouri, ought to have the opportunity to tell their story to the Postal Regulatory Commission, so they filed a motion asking the PRC to dismiss the appeal because it was submitted a week late.

As reported on STPO back in March 2013, the Postal Service closed the Freistatt office on two-days’ notice by emergency suspension — and on Good Friday no less. But that was not the end of the story.  It was only the beginning.


The first push to close Freistatt: The 2011 RAOI

Freistatt is an incorporated town of 160 people in the southwest corner of Missouri. The town is situated along Highway H, a main road that serves trucks traveling between Missouri and Arkansas, and it has a fairly thriving business sector.  There is a major insurance agency in the town, an active non-profit that mails Braille bibles for the blind, a large John Deere outlet, and a housing complex for seniors and the disabled.  Although the town’s population decreased between the 2000 and 2010 census, the general area of Lawrence County grew by about 34% during that time.

In 2011 the Freistatt post office was one of 3,700 offices marked for closing under the Retail Access Optimization Initiative (RAOI), and a discontinuance study was initiated in August of that year.  Like most discontinuance studies, this was a pro forma exercise that was less a study to determine if the office should close than a means to legitimize the Postal Service’s decision to close it.  The plan back then was to replace the post office with rural delivery.  

The discontinuance study was flawed by the usual anomalies and misinformation that has become an all-too-common feature of this process.  For example, even though the office had both a postmaster and a postmaster relief (PMR), in the cost-savings analysis, all of the offices hours were rated at the higher labor rate of the postmaster, thus giving the impression of greater savings than actually would have been accrued.

The initial letters sent to Freistatt’s customers had more than a few things wrong as well.  For example, the mileage to the other post offices was incorrect, and an office that was more than seventy miles away was included as an “alternate” facility. That initial letter, which is not in the administrative record provided by the Postal Service, also apparently had some assertions about the town and the post office that were wrong, including the notion that the town was unincorporated and that the postmaster did not help the elderly.  

What it’s all about: The war on workers goes to the post office

August 14, 2013


What if the postal crisis we’ve read about over the last five years isn’t really about saving the Postal Service after all?  What if the story really isn’t about an archaic Federal agency struggling to find a business plan in the face of technological change?  Could the real story be much simpler than that? 

Maybe the real story is about changing the basic relationship between employers and employees in the one sector of our economy where employees have been able to maintain decent wages and benefits.

Since 1980 wages have been stagnant for most people in the economy.  Despite continued and steady growth in productivity, wages — especially for those in the bottom 90% — have lagged by a factor of seven against productivity.  Since the early 1990’s, wages have essentially remained flat.

During this same period, traditional pensions have mostly disappeared and been replaced by 401Ks and other plans that shift the risk and responsibility for saving for retirement entirely to individual workers.  As costs of healthcare and insurance premiums have skyrocketed, workers have been left to bear more of the burden for those costs.

Between wage stagnation and the decreasing value of benefit packages, average workers are much worse off than they were thirty years ago. During the same period, however, capital has done extremely well.  That wealth gap became even more pronounced after the Great Recession. 

Those at the top of the pyramid have recovered quite well, while everyone else has gone sideways or downhill.  Corporate profits as a share of GDP are as high as they’ve been since 1929. Coincident with all of this is the fact that union membership as a percentage of the workforce has steadily decreased and is at its lowest level in more than a generation.


Attacking public employees

There is one partial exception to all this bad news and that is the public sector.  While American business and the corporate sector have generally been at war with the American worker — shifting wealth and productivity gains upward rather than distributing them throughout the economy — public-sector workers have retained most of their benefits and have seen wages at least stay level with inflation.

Paying workers in the public sector a decent wage sets a bad example, so the corporate elite and the Right have mounted an all-out attack by pushing for cuts in the workforce and cuts in wages and benefits.  One of the reasons unemployment has been so stubborn, even as the economy improves, is that job gains in the private sector have been offset by job cuts in the public sector.  Head count at the Postal Service is down more than 200,000 since 2005, and there have been similar losses in Federal, State, and Local governments across the country.  A generation of efforts by American business to erode the share of income flowing to labor has been successful, and now attention has been turned to the public sector.

The Right has celebrated this war against public employees just as it celebrated the war against working folks in general. The phony narrative of trickledown economics and tax cuts for the supposed job creators is a fundamental story of class warfare and redistribution of wealth upwards.  It is the phoniest of narratives because in an economy that relies on middle-class demand for growth and profits, the stagnation of wages, the degradation of benefits, and the general attack on labor has hollowed out our middle-class.  

As a number of economists have pointed out, our economy is stagnant because we lost over a trillion dollars of consumer demand, and there is no economic theory that allows for the replacement of that demand through more tax cuts for the wealthy or corporations.

An economy built on reducing wages and benefits to the lowest levels possible may lead to Wal-Mart prices and higher corporate profits, but it is a fool’s bargain that leads to low wage jobs that cannot sustain sufficient levels of demand to support the economy as a whole.  As the benefits of the economy increasingly accrue to a smaller and smaller group, it becomes clear that the wealthiest one percent cannot consume enough to sustain growth and general prosperity.

Whether or not it’s ultimately a successful strategy, the fact of the matter is that for the last generation the model has been to suppress wages and benefits in pursuit of higher profits.  And that brings us to the Postal Service.

USPS: A wholly owned subsidiary of Mailers Inc.

June 27, 2013


I am a card-carrying member of the DAV — Disabled American Veterans.   The organization has been a wonderful source of support over the years and does fine work on behalf of veterans.

So I was disappointed to discover DAV on the membership list of PostCom, the postal lobbying association that represents businesses and organizations that use the mail for business and commerce.   PostCom has been a vocal advocate for cheap mail rates, which come at the expense of Postal Service employees, consumers, and communities.

PostCom recently released a white paper on postal reform.  The paper offers nine principles that the Board of Directors of the lobbying group feel should be the basis of future postal reform.  The paper reads like a Christmas wish list from an industry that already enjoys healthy profits. 


Postal reform, the PostCom way

The first three principles, presumably the most important given their place at the top of the list, directly attack the wages and benefits of postal workers: pull postal workers from their federal health care program, allow the Postal Service to offer a defined contribution retirement plan instead of FERS, and require arbitrators in labor disputes to consider the Postal Service’s fiscal position.  The remainder of the proposals — like giving the Postal Service authority to reduce the days of delivery — place the interests of PostCom and its members above those of the American public generally.

Over the last several years PostCom and its executive director Gene Del Polito have consistently taken positions that seek to solve postal issues at the expense of postal workers.  They have advocated for the end of postal participation in FEHB — an idea that was debunked by, of all places, the conservative AEI, in this testimony before Congress in 2012.  They would also like postal workers to be withdrawn from the current federal retirement system, and they would like to tilt the collective bargaining process — a process that already restrains labor and mandates arbitration — in ways that would ensure unfair disposition of labor issues.

Del Polito and PostCom have taken the position that their members — they call themselves the “stakeholders” — should have preferential treatment when it comes to postal issues.  In their view cheap mailing rates are the only reason for the existence of the Postal Service.  They acknowledge no role of public service, no greater mission of binding the nation together, and no activity other than the distribution of advertising mail for the Postal Service.  In service of this laser-like focus on cheap preferential rates for their members, they have advocated beggaring the workforce, service reductions for first class mail, and the removal of essential services and infrastructure from America’s communities.

In some ways PostCom is no different than any of the industry lobbying groups that exist to lobby on their members’ behalf, such as the Affordable Mail Alliance, a group of 700 publishers, direct mailers and non-profits; the Alliance of Non-profit Mailers; and various trade associations like the National Newspaper Association.  In fact, many of these groups have members in common with PostCom, although many of them do not publish a list of their participating members as PostCom does. 

What all these groups have in common is the conviction that their financial interests not only supersede but essentially extinguish any other interests in the American postal system.  Even when PostCom offers proposals that might coincide with others’ interests — for example, the return of overpayments into the various retirement systems — their arguments are wholly self-centered and self-interested.  In their view, those overpayments are their money and should be returned in the form of even lower rates. 


Betrayal without remedy: The unwinding of the Postal Service

June 17, 2013


The United States Postal Service is not a corporation in the traditional sense of the word, but that hasn’t stopped its leadership — the folks at L’Enfant Plaza and the men and women who sit on the Board of Governors — from viewing it primarily as a corporate entity.  The post office is in the Constitution, but that hasn’t stopped some members of Congress from trying to undermine the idea of postal services and the postal network as basic fundamental infrastructure.  The Postal Service is supposed to serve the entire country, but that certainly hasn’t stopped the companies and industries that see themselves as the primary stakeholders in the postal system from demanding a more corporatized structure and mission that will serve their narrow interests.

Since the beginning of the country’s postal system, there have been voices chattering for privatization.  The Postal Reorganization Act of 1971 represented a major step toward that goal, and the 2002 Transformation Plan was another leap forward.  It demonstrated that the leadership of the Postal Service clearly prefers something akin to a privatized corporate entity.  In recent months, several think tanks have jumped on board with white papers advocating privatization, including a study reviewed by NAPA and a recent paper by Robert Atkinson, “Postal Reform for the Digital Age.”  At this point, talk of privatization has become mainstream in a way unimaginable just a few years ago.

We are now witnessing a postal passion play brought to us courtesy of the national media.  It features constant reports of staggering financial losses (sometimes including a reference to the retiree healthcare payments mandated by the 2006 PAEA), Pat Donahoe’s “woe is me — disaster is just around the corner” spiel (usually followed by an announcement of some further cuts to the network or services), and recriminations directed at Congress for not getting out of management’s way (as if giving management more freedom would solve anything).  The main storyline has been that the Postal Service is an inefficient (albeit beloved) government entity that is saddled with a bad business plan and impossible future liabilities, but it’s not beyond repair, if only those who know better were given the power to fix it.

That’s not the real story, though, and it never has been.  The real story is just beginning to come into focus: The leadership of the Postal Service, using the laws already in place, is engaged in their version of that most American of economic phenomena — the leveraged buyout. 

While publicly everyone involved has seemed intent on “saving” some semblance of the United States Postal Service, its leadership, egged on by some in Congress and many in the private arena, has managed the situation like a private equity firm that’s focused on extracting value out of an entity and bringing it to bankruptcy as a means of escaping past promises and contracts.  The story is nothing less than a new twist on the piracy of corporate raiders — this time with serious implications with respect to the very fabric of the social contract that developed after the Great Depression.

The unions and employee groups have focused on efforts to staunch the bleeding, the various industries that are dependent on the postal network have lobbied for the maintenance of preferential rates, and politicians have focused on photo ops and tough talk about creating a sustainable business model.  They are all focused on their own interests and seem unable to see that the demise of a great national institution is at hand.

This demise has nothing to do with a failed business model or a changing landscape where digital surpasses outmoded technologies.  The fall of the Postal Service is about the coming triumph of a resurgent ideology, an ideology that has led to countless financial panics, the abuses and inequality of the Gilded Age, and the Great Depression.  What is happening to the Postal Service is one piece of a greater puzzle.

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On Privatization

Good Reading on Postal Privatization

Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"


Privatization in the UK

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