kommonsentsjane

03/01/2025

https://www.msn.com/en-us/money/companies/congress-needs-to-update-the-nixon-era-law-on-how-the-postal-service-operates/ar-AA1zYzij

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Congress needs to update the Nixon-era law on how the Postal Service operates

Postmaster General Louis DeJoy recently announced his intention to step down after five years on the job. “As you know, I have worked tirelessly to lead the 640,000 men and women of the Postal Service in accomplishing an extraordinary transformation,” he wrote to the agency’s governing board.

DeJoy offered no reason for his departure. He cast a bit of shade at Congress, some of whose members have castigated his performance in hearings. Being postmaster general, he noted, “is a demanding role made more difficult by the devastating condition I found the Postal Service in when I arrived and the almost unceasing resistance to change — without offering any viable solutions — from stakeholders motivated by both parochial and political purposes. The simplest and most obvious ideas and solutions receive illogical and irrational scrutiny.” President Donald Trump is reportedly planning to fold the Postal Service, an independent agency throughout U.S. history, into his second, nonconsecutive administration. Trump would issue an executive order to fire the Postal Service’s governing board and then place the mail agency under the Commerce Department.

Related video: Changes coming to the United States Postal Service in 2025 (WHTM Harrisburg)

WHTM HarrisburgChanges coming to the United States Postal Service in 2025A former logistics executive, DeJoy had a tumultuous term. He arrived at the Postal Service during COVID-19 with the agency running desperately low on cash. DeJoy, a longtime fundraiser for Republicans including Trump, faced a barrage of partisan criticisms. Democrats and leftists peddled the conspiracy theory in 2020 that DeJoy would slow the mail to stop mail-in ballots for future President Joe Biden from being counted, and falsely alleged that he wanted to break the agency so it could be sold off to the private sector.The famously gruff DeJoy waved off all the carping and plunged forth to remake the Postal Service. The centerpiece of his efforts was the Delivering for America plan. This 10-year strategy commenced in 2021 and aims to transform the Postal Service from “an organization in financial and operational crisis to one that is self-sustaining and high performing.”

Cost control is central to the strategy, and DeJoy is trying to achieve that by shuttering and consolidating many mail-sorting facilities and replacing them with larger, state-of-the-art facilities that require less manpower to operate. The plan intends to drive down transportation costs by replacing the USPS’s aging gas-guzzling fleet with new, efficient vehicles that travel fewer miles.

Earlier this month, the Postal Service reported a $144 million profit in its most recent quarter. These results look all the better compared to the same quarter the previous year when the agency lost more than $2 billion.

DeJoy was delighted. “We did more with less this quarter,” he exclaimed during a recent meeting of the USPS’s governing board. “We hired fewer seasonal employees, relied on fewer annexes, flew fewer planes, ran fewer trucks to fewer places, and processed more mail and packages.” He also said the USPS was right-sizing its workforce by offering early retirements to some employees.

For all DeJoy’s efforts, he leaves the Postal Service with a future that is very much in doubt.

The agency predicts it will lose $6.9 billion in 2025. That is less than last year’s deficit of $9.6 billion, but it is a staggering sum. Revamping its legacy network is enormously expensive. The agency already has spent $17 billion and it estimates finishing the job will cost another $23 billion. How the agency can pay for these upgrades is anything but clear. The USPS has $9.5 billion in cash and liquid assets and has hit its $15 billion limit for borrowing from the Treasury. The agency has been skipping payments into its pension fund to preserve cash.

DeJoy hopes his successor will continue rolling out the DFA plan, but the Postal Service’s regulator and some of its customers do not believe it will work. The Postal Regulatory Commission recently issued a lengthy analysis that faulted the DFA strategy for faulty business modeling and overly optimistic financial projections and said it might degrade rural delivery service.

Reworking the USPS network also has produced some spectacular mistakes and inefficiencies. Last spring, hundreds of mail trucks idled for hours outside a USPS facility in Georgia and mail delivery slowed to a crawl. “Every time they open a new, large plant,” one mailing industry expert complained to the Washington Examiner, “the area’s service declines dramatically. It has happened in Richmond, Atlanta, and now Indianapolis.” USPS data show its success at delivering mail on time slid last year.

Two other mail industry veterans told the Washington Examiner that the DFA plan was inherently flawed. It has made “massive investment in middle-mile activities like sortation and distribution that the Post Office has not been particularly good at,” observed Michael Plunkett, a former USPS executive and president of the Association for Postal Commerce. The better strategy, they suggest, would have been for the Postal Service to partner with the private sector to outsource more of the shunting and sorting of mail and to invest mostly in making delivery as efficient and dependable as possible.

But even if DeJoy had pursued that strategy, it is not clear whether the USPS could stop running the deficits that have plagued it for two decades. Congress designed the USPS to fund itself by granting it a monopoly over the delivery of letters. Since 2008, however, mail volume has plunged to 112 billion mail pieces per year from 213 billion. First-class mail, the agency’s cash cow, has nearly vanished.

DeJoy hoped to keep the Postal Service afloat by transforming it into a premier parcel delivery company. Moving boxes, however, is not the same as moving mail. It necessitates replacing nearly much of USPS’s infrastructure, from mail carriers’ letter bags to mail-sorting machines and trucks. Becoming a packaging company also means the USPS would have to out-hustle the many private-sector package delivery companies.

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Regardless of what person or entity succeeds DeJoy, they will need to ask Congress for some help. The Postal Service is governed by a statute written when Richard Nixon was president and demand for mail was booming. Those days are long gone, and legislators need to rethink what the agency should be in the 21st century.

Things that cannot go on forever don’t, and unless something drastic is done soon, the two-century-old Postal Service will run out of cash and shut down, and taxpayers could be left footing a bailout.

Kevin R. Kosar (@kevinrkosar) is a senior fellow at the American Enterprise Institute and edits UnderstandingCongress.org.

Following is Congress’ work:

ttps://www.presidency.ucsb.edu/documents/special-message-the-congress-proposing-federal-pay-and-revenue-increases-and-urging-reform

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