Mail industry

James Cox Kennedy is the chairman of Cox Enterprises, a media conglomerate founded by his grandfather.  Mr. Kennedy is part of the 1% the Occupy movement is protesting against.  Actually, according to the Forbes 400 list, Mr. Kennedy’s $6 billion stake in the family’s company makes him the 53rd richest person in the United States, and that puts him in the top 0.00002%.  Mr. Kennedy doesn’t own the country’s post offices, but his company has hired a law firm to advocate closing them. 

Cox Enterprises is a highly diversified company based in Sandy Springs, Georgia.  It owns 15 television stations, 86 radio stations, several newspapers, and a broadband communications and entertainment company.  It also owns Cox Target Media, North America’s direct mail leader and provider of the Valpak® savings envelope.

You’re probably familiar with Valpak’s “Blue Envelopes®.”  They show up in your mailbox now and then, filled with coupons for discounts on a variety of products and services — automotive, beauty, entertainment, health, home improvement.  Maybe you look forward to saving a few bucks next time you need an oil change or a pizza.  Maybe you toss the thing in the trash without a second thought. 

Valpak depends on the Postal Service to deliver those Blue Envelopes, but the company isn’t very interested in post offices and postal workers.  Its primary concern is keeping postal rates down and profits up.  Cox mails the Blue Envelope to 40 million households each month, 500 million a year.  With that kind of volume, even the smallest increase in rates quickly adds up and cuts into profits.  That’s why the big mail industry stakeholders like Valpak and the Direct Marketing Association favor cuts to the postal workforce, processing plants, and retail network. 

On Friday, Valpak submitted its “Initial Brief” to the Postal Regulatory Commission (PRC) on the case of the Retail Access Optimization Initiative (RAOI), the Postal Service’s plan to close 3,650 post offices.  The brief was prepared by William J. Olson, PC, a Virginia law firm that deals with various kinds of law — constitutional, nonprofit organization, election, health, and firearms — as well as postal law.  Olson himself has written several papers about the postal system, such as “Enhancing Competition By Unbundling the Postal Administration,” which is about “bifurcating” the postal system so that a government-owned agency would take care of delivering the mail (thereby maintaining the universal service obligation), while the receiving and processing component of the system would be privatized.

The Valpak brief argues that the PRC should approve the RAOI because it will help “the Postal Service’s near-desperate need to achieve increased efficiencies and cost savings” and thereby avoid “some form of bailout from Congress, possibly from taxpayers, in order to continue operating.”  The brief addresses legal principles, the financial setting, the Village Post Office, the “non-postal” benefits of a post office, and so on, but the heart of the matter for Valpak is that post offices are simply a very "inefficient" way to “collect revenue” so it only makes sense to close post offices that are losing money and  “unnecessary.”  Otherwise, we’re headed for a “bailout.”

In its own “Initial Brief” to the PRC, the Postal Service studiously avoids any suggestion that post offices might be closed for running at a deficit.  “The RAO Initiative is structured so as not to violate the 39 U.S.C.
§ 101(b) prohibition against closing small Post Offices solely for operating at a deficit,” says the USPS brief.  James Boldt, the man running the RAOI, explicitly testified that whether any facilities were "operating at a deficit" was “not a criterion for their inclusion as candidates for discontinuance review under the RAO Initiative.”  The Postal Service has said repeatedly the RAOI is not only about “cost savings” but also about “optimizing the retail network” and other goals.  The Final Determination notices to close post offices always make it clear that there were several reasons for the discontinuance, not just that the post office was running at a deficit.

The Valpak brief, however, does not mince words, and it probably has the USPS lawyers cringing.  Valpak goes straight for the deficit issue and lays bare the real reason — the only reason — for closing post offices.  The brief states, “Uneconomic retail services, including but not limited to those post offices with a two-hour earned workload, constitute what long has been the most expensive and inefficient way of providing citizens with access to retail postal services.”