Postal Vision 2020 looks at the future of "postal services" and sees privatization
April 22, 2013
The third annual Postal Vision 2020 conference will take place this week in Washington, DC. The conference brings together speakers from a variety of backgrounds for what the Postal Vision website describes as a "provocative, candid conversation about what Americans should have in the way of ‘postal services’ in 2020 and beyond and who should provide them.”
More about postal privatization:
The title of this year's Postal Vision 2020 is "Positioning America for the New Millennium," and much of the conference will be about innovations in the mail industry, like digital solutions and eCommerce. But that reference to "postal services" and "who should provide them" indicates that the conference may be about something else as well. Judging by who's speaking at Postal Vision 2020, it's likely that one of the conference's main themes will be privatization of the Postal Service.
Three of the conference's big name speakers were recently involved with a study about a proposal to privatize half the Postal Service by creating a “hybrid public-private partnership.” The study was conducted by the National Academy of Public Administration (NAPA) with funding from Pitney Bowes, one of the two platinum sponsors for Postal Vision 2020.
The proposal calls for transferring the retail and processing operations of the Postal Service to the private sector, leaving the Postal Service with the delivery end. Over half the Postal Service — $35 billion in operating costs — would be handed over to private companies — companies like Pitney Bowes.
The Postal Vision 2020 website doesn't say a word about the NAPA-Pitney Bowes privatization study, but you can be sure it's on the agenda.
The NAPA-Pitney Bowes privatization study
The NAPA study was conducted with financial support from Pitney Bowes, amount unknown. The study purports to be objective and independent, but Pitney Bowes is anything but a disinterested observer of the country’s postal system.
The corporation received over $30 million from the USPS in 2012, and it's number 49 on the list of Top USPS Suppliers for 2012. Besides benefiting from direct payments for services rendered, Pitney Bowes profits off the Postal Service in other ways. PB is the country’s largest presort corporation. It consolidates, processes, and transports mail, which then qualifies for workshare discounts with the Postal Service. The system ends up giving private companies work that could be done (and used to be done) by postal workers, and many of the deals cost the Postal Service money because the discounts are larger than the costs avoided
If the hybrid public-private model were implemented, something on the order of $30 billion in mail processing costs would be transferred from the Postal Service to the private sector. Pitney Bowes stands to make billions off such a privatization scheme. No wonder it was happy to fund the NAPA study and to provide generous support to the Postal Vision conference, where the study can be discussed in a high-profile way.
The other main sponsor of the Postal Vision conference is Ursa Major, which, according to its website, “provides strategy consulting and business development services to the rapidly transforming world of postal-parcel-express logistics.” As one example of what the company does, the website cites a collaboration with the USPS OIG to produce a white paper about how the USPS could expand its postal platform into the digital world.
Like Pitney Bowes, Ursa Major is a major supplier of the US Postal Service. It received over $15 million in 2012, making it number 92 on the Top Suppliers list.
The co-founder and Executive Director of Ursa Major is John Callan. He has a long history in the mail industry. He's the founder of the global courier service, Calico Air Courier, which merged into DHL Worldwide Express.
Mr. Callan is the founder of Postal Vision 2020. At this year's conference, he’ll kick things off in the morning and provide closing remarks at the end of the day, on both days of the conference.
As indicated by his comments on this video, Mr. Callan is an advocate of aggressive cost-cutting at the Postal Service, "drastically" reducing the size of its workforce, and giving management control over the health plan. He also says he thought the Postal Service's announcement that it was going to offer a new clothing line was "a good use of their very powerful brand." (The Postal Service subsequently distanced itself from the announcement and removed the press release from its website.)
On Wednesday morning, the first major speaker will be David M. Walker. Mr. Walker was the chair of the NAPA panel that studied the privatization proposal.
Mr. Walker is currently the CEO of the Comeback America Initiative (CAI), an organization which he founded. CAI advocates cuts to entitlement programs, such as reforming Social Security by raising the retirement age, lowering benefits, and reducing the number of people receiving benefits. The CAI also recommends “full or partial privatization” of Amtrak, National Rural Electric Cooperative, Tennessee Valley Authority, and the Postal Service.
Before founding CAI, Mr. Walker was the President and CEO of the Peter G. Peterson Foundation, which uses Mr. Peterson's vast fortune to advocate for “fiscal sustainability.” The Foundation constantly depicts Social Security, Medicare, Medicaid, and other entitlement programs as desperately in need of dramatic cuts.
From 1998 to 2008, Mr. Walker was the Comptroller General of the United States. In that capacity, he issued a series of reports about how dire the future of the Postal Service was, and for many of those years, he had the Postal Service on his High Risk List. Under Mr. Walker’s leadership, GAO report after GAO report focused on declining revenues (even though revenues continued to rise through 2006), diversion to the Internet, and pension liabilities.
In May 2002, Mr. Walker warned Congress that the Postal Service was faced with a pension liability of $32 billion. A few months later, the OPM determined that rather than facing a large pension liability, “contribution rates set in current law would ultimately result in an overfunding of the amount needed to cover CSRS benefit obligations attributable to USPS annuitants by $71.0 billion.” That, however, didn’t stop the GAO from continuing to focus on the Postal Service’s dire financial condition.
Mr. Walker, sometimes mentioned as a potential candidate for President, has compared the United States today to the Roman Empire in its decline. He may know about that sort of thing. Between 1989 and 1998, Mr. Walker was a partner and global managing director of the accounting firm Arthur Andersen. In 2002, a few years after Mr. Walker left the firm, Anderson shut down when it was found guilty of criminal charges relating to the firm's handling of the auditing of Enron.
Later in the day on Wednesday, Paul Lawrence of Ernst & Young will give a talk at Postal Vision about “Hybrid Models.” Mr. Lawrence was on the NAPA panel that Mr. Walker chaired, and the title of his talk indicates that he'll also be discussing the private-public model of postal privatization.
Mr. Lawrence is the author of several books and articles, and he’s the co-author of an article entitled “Transforming a Traditional Agency into a Business: The United States Mint,” which is all about making government agencies more “businesslike.”
Prior to joining Ernst & Young, Mr. Lawrence was a Vice President at Accenture, a “management consulting, technology services and outsourcing company” that does a lot of work for the Postal Service. In fact, Accenture ranks eighth on the list of top USPS suppliers, with $136 million in business. In addition to doing work on Intelligent Mail barcodes for the Postal Service, Accenture helped produce the agency's five-year plan, which recommends a major downsizing push, ending Saturday delivery, and cutting the full-time workforce by 155,000 employees. Accenture also produces reports on international postal liberalization (i.e., privatization), diversification of the postal business, and so on.
The last event of the Postal Vision conference will be a panel discussion chaired by Dan G. Blair. Mr. Blair is the CEO of NAPA, and while he did not serve on the panel that did the privatization study, he probably had a lot to do with making the study happen, selecting the panelists, and influencing its recommendations.
Before going to NAPA, Mr. Blair served as Deputy Director and Acting Director of the Office of Personnel Management and as Chair of the Postal Regulatory Commission. He has taken several positions that have not been exactly favorable toward postal workers and postal services.
While he was with the OPM, for example, Mr. Blair testified to Congress in opposition to a proposal to shift a $27 billion pension liability for veterans working at the post office from the Postal Service to the Treasury Department. (Congress did eventually approve that proposal, but the Postal Service never realized the savings because the money ended up in the Retiree Health Benefit Fund.)
Subsequently, as the first chair of the PRC (appointed by President Bush), Mr. Blair suggested that the Postal Service could save money by closing small and rural post offices.
When the Postal Regulatory Commission issued its advisory opinion on ending Saturday delivery in 2010, the commissioners were divided. Chairman Ruth Goldway opposed the plan because, as she wrote, it "does not conform to the Nation’s postal policy,” while Mr. Blair supported it because, as he put it, everyone, from young people to the federal government, “is eschewing the mail in favor of the Internet.”
One of the other headliners at the Postal Vision conference will be Commissioner Robert Taub, who's currently serving as Vice-Chairman of the Postal Regulatory Commission. While he's not expected to talk about privatization, it will be interesting to hear what he sees in the future for postal services. In the past, as Chief of Staff to Congressman John McHugh, Mr. Taub helped craft the 2006 Postal Accountability and Enhancement Act. That legislation mandated ten annual payments of $5.5 billion into the Retiree Health Benefit Fund, and it's now responsible for 80 percent of the Postal Service's deficit.
Mr. Taub's vision of the future of "postal services" may not include post offices. During 2011-2012, the PRC reviewed a couple of hundred appeals on post office closings, and in all but a handful of cases, he and fellow commissioner Mark Acton voted to affirm the Postal Service's decision to close the post office, even as his colleagues on the PRC, Chairman Goldway and Commissioner Nanci Langley, voted to remand the decision.
That voting record does not suggest that Commissioner Taub is particularly sensitive to a community’s need for a post office. One wonders what he thinks of the proposal to replace government post offices with retail services in private businesses.
Senator Tom Carper
Also speaking at the Postal Vision conference will be Senator Tom Carper, well known for his work on postal legislation. While his positions on postal matters are a couple of shades better than those of his counterpart in the House, Congressman Darrell Issa, Senator Carper's record isn't perfect. For example, he was one of the main architects of the PAEA, so he can take some of the credit for the onerous requirement to prefund the Retiree Health Benefit Fund.
Senator Carper's views on the future of "postal services" may be influenced by the significant campaign contributions he receives from major stakeholders in the mail industry, such as big banks like MNBA, Wells Fargo, Citigroup, and JPMorgan Chase. During the 2012 election cycle, he also received $2,500 from the Direct Marketing Association, the trade group that represents direct mailers. (That may not seem like much, but it’s the biggest contribution DMA made during the 2012 elections.) In 2010, another top campaign contributor to Carper was UPS, with $21,900 in contributions from individuals and PACs.
Last week, Senator Carper decided it was a good time to cast aspersions on the Chairman of the Postal Regulatory Commission, Ruth Goldway. Carper and Tom Coburn, the leaders of the Homeland Security and Governmental Affairs Committee, sent a letter to Goldway requesting information on travel expenditures at the PRC. Noting that the Postal Service had lost $16 billion last year, Senator Carper suggested that “difficult financial times like these demand both innovative solutions and leadership by example.”
Senator Carper’s letter to Chairman Goldway was ostensibly a follow-up to a similar request made last year. In response to that inquiry, the PRC provided extensive documentation about the Commission’s travel budget. It showed that Goldway had spent just a little more on travel than her predecessor, Dan Blair.
As Senator Carper should know, when it comes to unnecessary and inappropriate travel expenses at the PRC, there’s no there there. His letter last week, like his letter last year, was not intended to help save money but to put the PRC, or at least Goldway, on the defensive. Carper has been on Goldway’s case for a while, going back to 2010, when he grew impatient with how long the PRC advisory opinion on five-day delivery was taking. He's probably regretting that the PAEA he helped write gave the PRC expanded authority, and it looks as though he'd prefer the PRC to stay out of things.
The roster of speakers at Postal Vision also includes NALC president Frederic Rolando, USPS Inspector General David Williams, and postal historian Richard John. The complete agenda is here. After the conference, Postal Vision should be putting a video of all the talks and discussions on its website, as it did last year.
You can read more about the Pitney Bowes NAPA study in these two previous blog posts on Save the Post Office.
(Photo credits: Postal Vision 2020)