Postmaster General: Change Is Coming, but Mail Service Won’t Go Away

United States Postal Service (USPS) Postmaster General and CEO Patrick Donahoe speaks prior to the unveiling of new postage stamps titled, 'Made in America: Building a Nation,' at a first-day-of-issue event at the Department of Labor in Washington, DC, August 8, 2013. The 12 stamp series honors workers who helped build the United States.
National Journal
Billy House
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Billy House
Nov. 4, 2013, 4:02 p.m.

Post­mas­ter Gen­er­al Patrick Do­nahoe laughs when asked about the posta­po­ca­lyptic movie The Post­man star­ring Kev­in Cost­ner. That 1997 film, set in the year 2013, is about hope be­ing re­stored to a band of sur­viv­ors through the false be­lief that mail de­liv­ery is con­tinu­ing to keep civil­iz­a­tion con­nec­ted.

“When so­ci­ety is at the end of the road, you’ll still have the Postal Ser­vice,” Do­nahoe said in an in­ter­view with Na­tion­al Journ­al Daily.

But 2013 has ar­rived. And Do­nahoe is the first to ac­know­ledge that his quasi-in­de­pend­ent agency is fa­cing a bundle of prob­lems that have left it bob­bing in red ink.

In all, the Postal Ser­vice is ex­pect­ing to lose more than $20 bil­lion in 2012 and 2013. The In­ter­net and the rise of email and on­line bill-pay­ing have taken away busi­ness. And a 2006 law re­quir­ing the agency to pre­pay its re­tir­ee health be­ne­fits con­tin­ues to add bil­lions of dol­lars in losses each year.

Mean­while, cus­tom­ers or law­makers are con­cerned about vari­ous steps the Postal Ser­vice wants to take, such as end­ing let­ter de­liv­ery on Sat­urdays, and what it plans to do with some un­prof­it­able rur­al post of­fices.

The agency an­nounced last month a re­quest to raise about $2 bil­lion in an­nu­al rev­en­ue through a 3-cent hike that would raise the price of a first-class stamp to 49 cents and a 1-cent in­crease that would push the rate for mail­ing a post­card to 34 cents.

The Postal Reg­u­lat­ory Com­mis­sion still must ap­prove the rate-hike pro­pos­al. Do­nahoe says he hopes for a fa­vor­able de­cision by the end of the year so the new prices can take ef­fect at the end of Janu­ary — “to al­low time for cus­tom­ers to make soft­ware changes that they need to make in mail pro­duc­tion.”

Busi­nesses that rely on the mail, in­clud­ing magazine pub­lish­ers and mail-or­der com­pan­ies, are lob­by­ing furi­ously against the in­creases, which would ex­ceed the rate of in­fla­tion. But Do­nahoe said the pro­pos­al is go­ing for­ward only be­cause Con­gress has not been able to agree on postal-re­form le­gis­la­tion.

“We’ve ex­hausted many, many op­tions already on things we can con­trol,” he ad­ded.

The Postal Ser­vice’s five- and 10-year busi­ness plans pro­ject rate in­creases that merely match in­fla­tion, not ex­ceed it. But those plans as­sume Con­gress will ap­prove le­gis­la­tion that nixes the re­quire­ment un­der the 2006 Postal Ac­count­ab­il­ity and En­hance­ment Act that the ser­vice pre­fund 75 years’ worth of re­tir­ee health be­ne­fits in 10 years — which Do­nahoe calls the most crit­ic­al need fin­an­cially — and that the USPS is also giv­en more flex­ib­il­ity to deal with its fisc­al prob­lems.

He said the cloud that hangs over the Postal Ser­vice is the idea that it has con­tinu­ally large fin­an­cial losses — and that it pro­duces a “crisis of con­fid­ence” in some large cus­tom­ers.

But a planned markup Wed­nes­day of a bi­par­tis­an Sen­ate bill from House Home­land Se­cur­ity and Gov­ern­ment­al Af­fairs Com­mit­tee Chair­man Thomas Carp­er, D-Del., was scrapped, as some law­makers ex­pressed a range of con­cerns. The Sen­ate passed a bill in the last ses­sion to ad­dress some of the prob­lems, but the House did not vote on the bill, nor did it pass its own ver­sion.

This ses­sion, a new meas­ure from House Over­sight and Gov­ern­ment Re­form Com­mit­tee Chair­man Dar­rell Issa, R-Cal­if., was ap­proved by his com­mit­tee along party lines. It in­cludes ef­forts to soften pre­vi­ous pro­pos­als to close rur­al post of­fices and would im­me­di­ately end Sat­urday mail ser­vice.

In the in­ter­view, Do­nahoe said that if mem­bers of Con­gress were able to get to­geth­er on a bill, and it were signed in­to law, he sees Sat­urday de­liv­ery pos­sibly com­ing to an end by Me­mori­al Day. But he said, “Our biggest con­cern in the House and the Sen­ate has been, I guess, the push-back against changes in de­liv­ery sched­ule.”

Go­ing for­ward, the Postal Ser­vice can ef­fect­ively and af­ford­ably de­liv­er mail five days a week, he said. “We’ll still de­liv­er pack­ages and medi­cine on Sat­urday. But when you’ve lost the volume we’ve lost — al­most 30 per­cent — you can’t con­tin­ue to do these things go­ing in­to the fu­ture if you’re plan­ning on be­ing self-suf­fi­cient,” Do­nahoe said. “So we’ll be a sev­en-day pack­age de­liver­er and a five-day mail de­liver­er,” he said. “And I think the faster we get there, the bet­ter it is for every­body.”

Do­nahoe ac­know­ledged the con­gres­sion­al res­ist­ance to con­sol­id­a­tion of some fa­cil­it­ies, in­clud­ing rur­al post of­fices. “What that caused us to do was to take an­oth­er ap­proach, which is mov­ing more to a part-time status for some of our less-used of­fices,” he said. “It’s nice to have an out­let in a place in what we’d call deep rur­al Amer­ica where a per­son can go to the post of­fice on the off-hours, ac­cess their mail­box, and pick their pack­age up, without hav­ing to travel real far.”

Some law­makers have said the Postal Ser­vice has been too fo­cused on cost-cut­ting and not enough on rais­ing new rev­en­ues. But Do­nahoe said the agency has been work­ing on that front, too, of­fer­ing ideas for al­low­ing states to use post of­fices to pro­cess driver’s li­censes or hunt­ing and fish­ing li­censes.

But, he said, “I will tell you this, there are no states that are knock­ing our doors down try­ing to get us to trans­fer their work. The big prob­lem that you have with some of that kind of work is, it’s go­ing to the In­ter­net, any­way.”

There may be oth­er op­por­tun­it­ies in data-de­liv­ery, “in terms of be­ing able to send very se­cure di­git­al mes­sages, wheth­er it is bank­ing and health care or those kind of things,” Do­nahoe said. “We think there are op­por­tun­it­ies for us to be in that space that make sense and would help the eco­nomy in gen­er­al, the Amer­ic­an pub­lic in gen­er­al.”

And then there are calls, from Sen. Chuck Schu­mer, D-N.Y., and oth­ers to end Pro­hib­i­tion-era re­stric­tions on ship­ping beer, wine, and oth­er spir­its through the Postal Ser­vice.

“That’s big busi­ness,” said Do­nahoe, “when you go and take a look at the world of wine clubs, and there are a lot of small mi­cro­brew­er­ies, and small firms that make things like spe­cialty bour­bons, and what-not.”

Do­nahoe, who star­ted out as a clerk in a mail-pro­cessing plant in Pitt­s­burgh 39 years ago, says the Postal Ser­vice will not go away. While it has been some­times frus­trat­ing try­ing to get every­body on the same page, he says, “my job is to keep plug­ging away [and] don’t let up.”

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