USPS Responds to Lexington Institute’s “Saving the Postal Service requires getting the details right” article

uspshq25/16/17 How ironic, that in his article for the Lexington Institute on “Saving the Postal Service requires getting the details right,” Don Soifer doesn’t get much right at all.

Contrary to his assertions, the Postal Regulatory Commission, the oversight body tasked by Congress with reviewing the matter, has concluded every year that products covered by the letter monopoly do not cross-subsidize the Postal Service’s competitive products. The reason we continue to attract e-commerce customers and grow our package delivery business is not because of unfair competition with private carriers, as Mr. Soifer alleges, but because customers increasingly see the value of our predictable service, enhanced visibility, and competitive pricing.

The Commission has also noted that competitive products help fund the infrastructure of the Postal Service. It is that infrastructure that enables us to fulfill our universal service obligation to deliver to each and every address in the United States, six days a week, and to provide to every American mail delivery no matter where they live, at an affordable rate.  Absent the critical revenue provided by our package business, senders of letters and other types of mail would have to bear the entire cost burden of this infrastructure.

Despite what Mr. Soifer would have you believe, the costing approach currently in place is consistent with best economic practices, by only attributing costs to an individual product if that product actually caused the cost to be incurred, rather than using arbitrary methods. The Postal Service has a large amount of common costs because we provide multiple products across a nationwide universal service network. These costs are not simply “overhead,” rather, the bulk of these costs are incurred because of the universal service obligation.

Mr. Soifer also criticizes the Postal Service for not making annual payments to prefund retiree health benefits. What he doesn’t tell you is the reason why. It’s because we didn’t have the money needed to make those huge payments required by a 2006 law. These large payments would be unnecessary if the Postal Service would be allowed to fully integrate its retiree health plans with Medicare, as every private sector entity that provides retiree health benefits coverages does. This issue is something that new postal reform legislation, H.R. 756, addresses, along with other important provisions to provide the Postal Service with a more sustainable business model.

The Postal Service’s financial situation is serious but solvable. Continued innovation and aggressive management actions together with the passage of the provisions of H.R. 756 into law and a favorable outcome in the Postal Regulatory Commission’s 10-year review of the Postal Service’s pricing system will restore the organization to financial stability and allow us to continue to provide excellent service to the American public.

9 thoughts on “USPS Responds to Lexington Institute’s “Saving the Postal Service requires getting the details right” article

  1. Wtodd…I believe you and I are on the same page. It’s not my intention to upset anyone with my posts. I don’t think the USPS should be stuck with the prefunding requirement either. But the PMG agreed to this before the 2006 legislation was passed. I can’t undo what he did and neither can anyone else. I don’t believe that retiree’s should be stuck paying for 2 heath benefit plans. The Postal Service should increase postage enough on all types of mail to solve this problem rather than put it on the backs of retirees.

  2. UPS, FDX, Amazon, Wal-Mart, Target all to deliver their own packages…..then there is the US Postal Circus! turn out the lights!

  3. A rather distorted status quo continues,in which the U.S. Postal Service does NOT make the”the pre-fund” retiree payments,and the United States Senate;fails to confirm any Postal Board of Governors.

  4. dear Mr. Feduptwice, It is just amazing that the Postal Service, and only the Postal Service, is responsible for their health care costs! Force ever employer in America to prefund health care costs! Why is only the Postal Service stuck with that wasteful crap? I notice that it is ok to shift the cost of employees in private business to the taxpayer. Business is allowed to pay as little as possible while the tax payer must pay for the earned income tax credit, Medicaid, welfare, food stamps, and what ever else business can take from the American suckers, the tax payer. Businessmen should be able to take constructive criticism and pay their own way. For businessmen to live off the tax payer is not professional!

  5. So Mr.Sofier thinks that the postal service should pay the prefunding of health care cost as required. His statement should be why is the Postal Service required to make payments that no other employer is stuck with! That though never enter is mind. He, and many others, think that this weight can help destroy the postal service. And then the movement of the mail can thus be given to a private business than can make lots and lots of money. And the employees will in turn make very little in pay. And then just another business that will be able to make political donations!

    • The PMG at the time agreed to make these payments. Dumb move on his part. The current PMG and postal unions think they have found a panacea in HR 756. Dumb move on their part. If those of us who have been retired from the USPS don’t vocalize our concerns then we will be paying for 2 insurances. Dumb move on our part if we don’t. The unions are misleading Congress when they say they represent retiree’s. I have a union health insurance plan and pay a yearly association fee to them. Not once have I received anything fom them on or about HR 756. Dumb move on their part.

  6. The Postal Service response to the Lexington Institute does not address the Institutes analysis. The USPS response that HR 756 is the cure all for their problems is pure bull!!! HR 756 is a way the Postal Service shifts their financial responsibility onto Medicare and the American taxpayer. Rather than take constructive criticism the Postal Service responds in a demeaning manner. Whoever writes these responses is not professional!

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