PRESIDENT TRUMP is angry at Amazon for, in his tweeted words, “costing the United States Post Office massive amounts of money for being their Delivery Boy.” Yet in more recent days, Mr. Trump has at least channeled his feelings in what could prove a constructive direction, by ordering a task force to spend 120 days on a “thorough evaluation of the operations and finances” of the U.S. Postal Service, including recommendations for reform. An examination of the facts would certainly be preferable to more Twitter battles.
At the top of Mr. Trump’s list of priorities for the task force is a study of package delivery pricing for the Postal Service’s various clients, including Amazon, of which The Post’s owner, Jeffrey P. Bezos, is chief executive and chairman. This is a perfectly legitimate subject for study and not one on which we would offer a view. We would note what all previous studies of the Postal Service have found: Reasonable people can disagree about the precise allocation of fixed costs and other arcana that go into negotiating USPS’s deals with large-scale shippers; and, whether optimally priced or not, package delivery is not the fundamental cause of the Postal Service’s chronic problems.
Rather, the Postal Service has a basic structural problem: Technology has caused a permanent loss of the USPS’s most profitable line of business, first-class mail, while it still must pay high and rising legacy costs for retiree and employee health care and pensions. Products that account for 74 percent of USPS revenue are covered by a statutory price cap.
When it comes out, Mr. Trump’s task force’s report will land on top of an already towering pile of previous studies confirming the above analysis. In 2016, financial expert and former senior Treasury Department official James E. Millstein provided the Senate an exhaustive report on the agency’s need for restructuring. A key fact from Mr. Millstein’s report: In 1995, USPS moved 181 billion pieces of mail, while the Internet transmitted 100 billion emails and text messages; in 2010, the Postal Service moved 172 billion pieces, while the Internet transmitted 216 trillion emails and texts.
USPS has been keeping itself afloat in recent years by growing the package business and, less entrepreneurially, drawing on a line of credit with the U.S. Treasury and defaulting on a total of roughly $34 billion from 2012 through 2016 in mandatory prepayments to its health insurance fund. Only Congress can provide a more permanent solution. Yet that has proved elusive, as we have pointed out many times, because none of the “stakeholders” with an interest in the status quo — unions, regulators, shippers, rural communities, bulk mailers — are eager to surrender those aspects of it that benefit them.
Last year there was a breakthrough of sorts, in that everyone converged on a modest reform plan in the House. It would have allowed the Postal Service to raise first-class rates modestly, while shifting some retiree health-care costs to Medicare. The bill would have saved $28.6 billion over five years, but it did not pass; supporters recently introduced a similar measure in the Senate. Mr. Trump could support that as a first step toward the more fundamental change that USPS needs.
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