The United States Postal Service (USPS) is an independent branch of the federal government responsible for providing Postal Service in the United States. The USPS handles the mailing of letters and packages, sorting and delivering mail, and selling postal products like stamps, mailing supplies and commemoratives. The Postal Service has long been one of the most criticized federal operations, accused of rampant inefficiency and bloated bureaucracy. Over the past several years, the critically ill state of the economy and the widespread use of electronic communication have contributed to putting the agency into financial crisis, as it suffers annual multi-billion-dollar losses. In the past five years, mail volume has declined by more than 43 billion pieces, with single-piece First-Class letters declining by 36%. First-Class Mail volume has dropped by 50% in the past 10 years. Calls for privatizing the Postal Service have been uttered time and again, but they have yet to gain any real traction with lawmakers or the White House. The USPS has made a series of proposals to a wary Congress for ways to avoid all-out bankruptcy.
Before mail was delivered daily, citizens depended on friends, merchants, and Native Americans to deliver messages around the country, and even to Europe. By 1639, the first official mail service in the colonies was developed by the General Court of Massachusetts. Richard Fairbanks’ tavern in Boston was chosen as the official repository for mail delivered from or going out to places overseas.
Local authorities developed routes in their areas, and in 1673, Governor Francis Lovelace of New York set up a monthly post between New York and Boston. Although the service was short-lived, the rider’s trail became known as the Old Boston Post Road, which comprised the current U.S. Route 1.
Governor William Penn established Pennsylvania’s first post office in 1683. And in the South, private messengers, who were usually slaves, brought messages from plantation to plantation. As this network expanded, so did the routes carrying messages.
After 1692, a central post organization was established in the colonies, when Thomas Neale received a 21-year grant from the British Crown. Although Neale never visited America, he appointed Governor Andrew Hamilton of New Jersey as his deputy postmaster general. Neale’s franchise costs were low and yet he died heavily in debt after passing his post to Andrew Hamilton and Robert West.
The British government bought the rights to the North American Postal Service in 1707 and appointed Hamilton’s son, John, as deputy postmaster general. He was succeeded by John Lloyd of Charleston, South Carolina, in 1721. Alexander Spotswood, former lieutenant governor of Virginia, became deputy postmaster of America and appointed Benjamin Franklin to be deputy postmaster general of Philadelphia in 1737.
Franklin made important and lasting improvements to the colonial posts, reorganizing service, touring and inspecting post offices to the north and south, and placing milestones on the postal routes for safety. He established shorter routes and sent postal riders out to carry mail at night on a speed service between Philadelphia and New York. The colonial posts turned their first profit in 1760 under Franklin’s leadership.
Franklin was dismissed by the Crown in 1774 for actions deemed sympathetic to the cause of the colonies. When he left office, post roads operated from Maine to Florida and from New York to Canada. Mail was delivered on a regular schedule with posted times.
William Goddard, a printer and newspaper publisher, set up the Constitutional Post of inter-colonial mail. It was funded by the colonies using a subscription model, and net revenues were used to improve mail service. When the Continental Congress met in Philadelphia in 1775, Goddard’s post was flourishing, and 30 post offices were in operation. The Constitutional Post set up rules for hiring reputable post riders and how riders were to secure the mail with a lock and key.
Three weeks after the battles of Lexington and Concord, the Second Continental Congress met in May 1775 to plan for the colonies’ defense in the event of a British attack. Delivery of messages and other material was deemed necessary for freedom, so a committee, chaired by Benjamin Franklin, recommended founding a domestic postal system. After the committee reported back to the Continental Congress in July, the Congress created the position of Postmaster General and named Franklin to the post. Franklin’s son-in-law, Richard Bache, was named comptroller, and William Goddard was appointed surveyor.
During the Revolutionary War, the postal system carried communications between Congress and the armies. Riders were exempted from military duties so service would not be interrupted. Franklin served as Postmaster General until November 7, 1776, and, as such, is considered the first Postmaster General of the United States. The Postmaster General was part of the presidential cabinet and was the last person in the line of succession to the presidency.
In the 19th century, the postal system continued to grow. The Post Office Department, which had been founded to oversee the Postal Service, developed new services and established new post routes. As the United States grew dramatically between 1789 and 1861, when the Civil War broke out, its population also increased. This meant more mail and even more post roads. By 1819, the Postal Service served 22 states and developed faster service. By 1822, it took just 11 days to move mail between Washington D.C. and Nashville, Tennessee.
By 1828, there were 7,530 post offices and 29,956 postal employees, mail contractors and carriers. John McLean of Ohio was the first Postmaster General to refer to the Post Office, or General Post Office, as it was sometimes called, but the organization was not officially established as an executive department until June 8, 1872.
By 1831, postal employees accounted for 76% of the civilian federal workforce. States continued to petition Congress for new post routes regardless of their potential for profit. The federal government struggled with this issue and decided to subsidize postal routes that supported national development. Rates were changed as well. In the past, rates were determined by the number of pages in a letter and the distance it was traveling. But in 1845, the Postal Service began charging based on weight, and whether the letter was going more or less than 300 miles. This was done through legislation adopted on March 3, 1863. The act also created three classes of mail: first class, second class, and third class.
As technology improved, with fast-moving steamboats, mail began to move faster. In 1815, operators of steamboats had to deliver the letters and packets they carried to local postmasters within three hours of docking in daylight, or two hours after sunrise the following day. In the 1820s, more than 200 steamboats were serving river communities in this way. The Postal Service also contracted three vessels to carry mail. An 1823 law declared waterways to be post roads.
Mail service reached all the way to California by 1848, with the hopes of delivering mail within 3-4 weeks from the time it was sent. Often, this was not the case. Mail traveled by ship from New York to Panama, and then moved across Panama by canoes before it was loaded into another ship that carried it to San Francisco. The Panama Railroad made this journey slightly easier by 1855, but it wasn’t until September of 1858, when John Butterfield’s Overland Mail Company established a 2,800-mile southern stage route between Tipton, Missouri, and San Francisco, that mail began to arrive more frequently.
The Railway Mail Service (RMS) was created in 1864 to subsidize the railway system. Railways were asked to build special cars to transport mail in exchange for a government subsidy. RMS workers became the fastest mail sorters in the business and made it possible for local carriers to deliver all of the mail at the same time.
Mail was still delivered to a central location, usually from post office to post office. People could pick up their mail or pay two extra cents to have it delivered by local courier. In 1862, Postmaster General Montgomery Blair suggested that the Postal Service extend free delivery of mail by salaried mail carriers. Congress agreed with this suggestion and signed it into law on March 3, 1863. Income from local postage was more than sufficient to pay all expenses for the new service. Street addresses were added to letters for the first time.
On June 30, 1864, free city delivery was established in 65 cities nationwide, and 685 carriers delivered mail there. By 1880, 104 cities were served by 2,628 letter carriers. And by 1900, 15,322 carriers provided services to 796 cities. In order to receive mail at home, a citizen had to be at home. Otherwise, mail remained in the carrier’s satchel to be redelivered later. In 1912, people were encouraged to provide mail slots or receptacles, and by March 1, 1923, they were required for delivery service.
In the 1890s, the New York Society for Suppression of Vice, spearheaded by Anthony Comstock, helped to make the mailing of obscene material illegal. This comprised indecent material, as well as anything involving abortion, contraception, or alcohol. Comstock appointed himself “Special Postmaster” and attempted to enforce these laws using a posse comitatus of RMS workers.
By the 1930s, letter carriers began delivering to customers at the edges of cities using boxes at the curb line. As Americans began moving increasingly to the suburbs in the 1950s, more and more curbside mailboxes began to spring up. Up until that time, mail carriers worked 52 weeks per year and 9-11 hours per day on average. Many worked Monday through Saturday and sometimes on Sunday as well. A congressional act in 1884 granted them 15 days of leave per year, and in 1888, Congress declared that a day’s work would be 8 hours, and hours above and beyond that were to be paid accordingly. The 40-hour work week began in 1935.
Mail carriers walked as many as 22 miles a day, carrying up to 50 pounds of mail at a time. There were sometimes two deliveries per day to residences, and up to four per day at businesses. This was discontinued on April 17, 1950. By the mid-1950s, the maximum weight to be carried by a postal worker was reduced to 35 pounds, which is where it remains today.
At the beginning of the 20th Century, Americans were still being served by the Post Office Department. They lived largely in rural areas and this presented challenges to the Postal Service. By the mid-1960s, the Post Office Department had financial problems due to neglect and fragmented control. Facilities, equipment, wages, and management efficiency had to be overhauled. In October 1966, the Chicago Post Office came to a halt as the volume of mail surpassed workers’ ability to sort and deliver it. A 1967 House Appropriations Subcommittee labeled the Postal Service “a race with catastrophe.” Five to ten million pieces of mail were being sent each day, but systems could not keep up.
In 1971, the department was reorganized as a semi-independent agency of the federal government. Its name was changed to the United States Postal Service (USPS). New laws also removed the Postmaster General from the line of succession for the presidency.
In the 37 years since the Postal Reorganization Act was signed, technological advances have improved services and operations. Although the volume of mail has continued to grow each year, it declined in 1991 for the first time since the Depression. In 1992, the post service created a new organizational structure that replaced five regions and 73 field divisions with 10 areas and 85 districts in an effort to keep rates holding steady.
In 2006, Congress passed and President George W. Bush signed the Postal Accountability and Enhancement Act (pdf). It enacted numerous USPS reforms, including pre-funding retirees’ health-care costs, and modifying matters pertaining to budget submission, pension benefits, regulatory activity, rate-setting, Board of Governor terms, and agency transparency.
In March 2010, then-Postmaster General John Potter announced a 10-year strategy for the USPS as a means to avoid a cumulative deficit of $238 billion by 2020. The plan included elimination of Saturday deliveries, which was touted as a $3 billion per year savings. The plan also sought relief from pre-funding retiree health benefits, which would save $5.6 billion annually. It additionally sought retail partnerships and the right to hire part-time employees.
Mail volume reached record levels from 1992 to 2000. Although the terrorist attacks on September 11 diminished this volume slightly in 2001, total mail volume dropped by nearly five billion pieces in 2002. Two years later mail volume again increased. Currently the USPS sorts and delivers more than 177 billion pieces of mail annually, which is approximately 40% of the world’s total mail volume. In the past five years, mail volume has declined by more than 43 billion pieces, with single-piece First-Class letters declining by 36%. In the last year alone, First-Class Mail has declined by 6.6%, with USPS processing about 563 million pieces of mail a day. In FY 2011, overall mail volume had been forecast to fall by 3.5 billion pieces (2%), with a projected 6.5% decrease in First-Class Mail. First-Class Mail is projected to drop to 39 billion pieces annually by 2020. While commercial junk mail, now known as “Standard Mail,” has been experiencing a 1.7% increase in revenue this year, it generates only a third as much as First-Class Mail, and therefore can’t make up for the loss of First-Class business.
In the fourth quarter of 2011 alone, the USPS suffered a $3.3 billion net loss, and it is expected to lose $10 billion per year if no action is taken. The agency has asked Congress for permission to close unprofitable postal facilities, move from a six-day to five-day weekly delivery schedule, relax delivery times, and withdraw from federal retirement and health-care plans.
In his FY 2013 budget, President Obama expressed support for the termination of Saturday mail deliveries, raising the price of stamps above the rate of inflation, and relaxation of costly payments to pre-fund future postal worker retirements. As part of that, he proposed the refunding of $10.9 billion to USPS over two years from a credit it has with the Federal Employee Retirement System. USPS claims that the enactment of those proposals would save the agency $25 billion over the next 11 years.
O’Keefe, Washington Post)
USPS Looks To Congress To Avert Bankruptcy (Lexington Institute)
The United States Postal Service (USPS) is an independent federal agency responsible for providing Postal Service for the United States. This is done through collecting postage for the mailing of letters and packages, sorting and delivering mail and selling post-related products like commemorative and collectible stamps, as well as postal supplies.
The Board of Governors of the USPS sets policy, procedure and postal rates. It has a similar role as a corporate board of directors. Of the 11 board members, nine are appointed by the President and confirmed by the Senate. These nine appointed members then select the U.S. Postmaster General, who serves as the board’s tenth member. He or she also oversees the day-to-day activities of the Postal Service and acts as chief executive officer. The 10-member board then nominates a deputy postmaster general who acts as chief operating officer and takes the remaining seat on the board.
Although the USPS is often mistaken for a government-owned corporation like Amtrak, it is legally defined as an “independent establishment of the executive branch.” As a quasi-government agency, it has many special privileges, including sovereign immunity, eminent domain powers, powers to negotiate postal treaties with foreign nations, and an exclusive legal right to deliver First-Class and Standard Mail. In 2004, the U.S. Supreme Court ruled that the USPS was not a government-owned corporation and could not be sued under the Sherman Antitrust Act.
The Postal Service’s Independent Office of Inspector General (OIG) prevents waste, fraud, theft, and misconduct by the Postal Service. In 2004, the responsibilities of this office increased, when allegations of postal employee misconduct were added. Starting in February 2007, issues of embezzlement, record falsification, workers’ compensation fraud, contract fraud, and on-duty narcotics violations were referred to the USPS OIG.
The OIG’s staff of 1,071 members includes special agents (federal law enforcement officers authorized to carry firearms, make arrests, and investigate federal criminal violations), auditors (professionals trained in government audit and accounting standards), and others. Since it was established, the Office of Inspector General has issued 3,077 audit reports and management advisories accounting for more than $3.7 billion in questioned costs, unrecoverable costs, funds put to better use, and revenue impact. Examples of fraud uncovered by USPS OIG investigations include a trucking contractor defrauding the Postal Service of $1.5 million in fuel rebates; a highway route contractor defrauding the Postal Service of $120,468 for services not rendered; and a construction contractor charging the Postal Service $175,630 for work never done.
The Department of Defense and the USPS jointly operate a postal system to deliver mail for the military. This is known as the Army Post Office (for Army and Air Force postal facilities) and Fleet Post Office (for Navy, Marine Corps and Coast Guard postal facilities).
From the Web Site of the USPS
According to the United States Postal Service USPS FY 2012 Integrated Financial Plan (pdf), the agency’s projected operating expenses for FY 2012 are as follows:
Compensation and Benefits $51.2 billion
Retiree Health Benefits Pre-funding $11.1 billion
Other Non-Personnel Costs $7.3 billion
Transportation $6.3 billion
Depreciation $2.2 billion
Total Operating Expenses $78.1 billion
The USPS also earmarked $.9 billion to Capital Commitments projects and $1.1 billion for Capital Cash Outlays—all for facilities, equipment, and infrastructure.
According to Husch Blackwell LLP, a law firm whose specialties include a Postal Service contracting practice, about $12 billion was spent by USPS outside of the agency in FY 2010, and just over half of that—$6.32 billion—went to transportation. About half of that figure—$3.2 billion—went to highway transportation, which increased by 5.3% from last year as the USPS shifted mail from air to surface transportation. USPS spending for supplies and services totaled $2.2 billion. Spending on the agency’s roughly 30,000 facilities declined by $86 million to $1.7 billion.
Based on data compiled from a Freedom of Information Act request, the top five contractors whose services were used by USPS in FY 2010 were:
1. Federal Express Corporation $1,373,140,689
2. Northrop Grumman $494,601,395
3. Kalitta Air LLC $371,823,791
4. Pat Salmon & Sons Inc. $142,869,164
5. Siemens $134,774,653
Federal Express has been USPS’s biggest supplier for eight years in a row. FedEx signed a seven-year contract with the agency in 2001 to transport its Express Mail and Priority Mail for USPS. In 2007, the contract was extended until September 2013.
Northrop Grumman, a $30 billion global defense and technology company, is USPS’s second largest supplier. It provides the agency with the equipment for the automated handling of large envelopes, catalogs and magazines. In 2007 it signed an $874.6 million contract with the USPS for 100 units of the so-called FSS automation hardware.
Kalitta Air LLC provides air transportation and mail distribution services, a large portion of which is military mail bound for overseas destinations.
Top 150 USPS Suppliers in 2010 (by David P. Hendel, Husch Blackwell LLP) (pdf)
USPS Suppliers (website page)
"Postal Reform Act" would also reform USPS contracting (by David P. Hendel, Husch
The U.S. Postal Service awarded five-year air transportation contracts to seven passenger airlines as of September 30, 2006. These included American Airlines, American Trans Air, Continental Airlines, JetBlue Airways, Midwest Airlines, Sun Country Airlines, and US Airways. In order to keep the mail delivered on time, the agreements contain on-time delivery requirements and performance standards. Total value is estimated at approximately $225 million. The volume of mail to be transported under the contracts is estimated at approximately 450 million pounds.
Seven Airlines Awarded USPS Contracts (PRNewswire)
In May 2002, the U.S. Postal Service awarded contracts to Ashland Inc. and Sabre Oxidation Technologies Inc. for anthrax decontamination of the Brentwood postal facility in Washington D.C. and the Trenton processing and distribution center in Hamilton Township, New Jersey, which had been contaminated in the wake of the September 11, 2001, terrorist attacks and their aftermath.
Computer Sciences Corporation was awarded a professional services ordering agreement from the USPS in May 1998, to support the development and implementation of enterprise-wide information technology solutions for administrative functions. The agreement contains a one-year base and two option periods not to exceed nine years. CSC had $6.6 billion in revenues for the 12 months that ended April 3, 1998. In 2003, CSC’s subsidiary DynCorp Technical Services received five-year follow-on awards for two contracts with the USPS. These two contracts are valued at over $200 million.
In September 2006, the Postal Service renewed a contract with ABX Air Inc. for terminal holding services in Indianapolis. The term of the contract was for four years and was expected to generate additional revenue of $17.7 million. ABX has also won contracts from the Postal Service to manage its centers in Dallas and Memphis. Each of these contracts has a provision for two, two-year extensions. ABX operates a fleet of 100 aircraft and 18 hubs throughout the United States. It reported $1.46 billion in revenue in 2005.
U.S. Postal Service renews ABX contract (Columbus Business First)
The USPS also renewed its contract with Continental Airlines in September 2006, providing a five-year term for $258 million. The airline agreed to carry Priority, First-Class, and Express Mail products in the United State and Puerto Rico. Houston-based Continental, which merged with United in 2012, had carried mail for the USPS for more than 70 years.
Continental nets $258M U.S. Postal Service contract (Houston Business Journal)
In May 2006, the USPS awarded two contracts totaling $9 million to Lockheed Martin to upgrade and increase the processing capability of the Remote Computer Reader (RCR) system. This will provide additional capacity to handle processing during peak periods.
Lockheed Martin Awarded Contracts to Improve U.S. Postal Service Mail Processing System (Lockheed Martin press release)
USPS Official Gives Contracts to Associates
In 2010, after only two years on the job, Robert Bernstock left the U.S. Postal Service (USPS) as its top marketing expert, leaving behind a trail of controversies. While serving as president of mailing and shipping services, Bernstock was responsible for improving business opportunities for the Postal Service. Along the way, however, he also violated federal rules time and again. Bernstock improperly used government staff to manage his personal finances and outside business interests, according to the USPS inspector general. Even after he was warned to stop doing so, he continued to behave badly. He awarded six non-competitive contracts to associates, including a $1.5 million deal to Goldman Sachs, which was a major investor in Nutrisystem, where Bernstock was a board member. He also failed to recuse himself from negotiations with Costco—in which he owned $30,000 in stock—to allow the company to sell Christmas stamps in bulk. Caught up in the scandal was Postal Service General Counsel Mary Anne Gibbons, who apparently knew of Bernstock’s transgressions but failed to report them to the inspector general.
USPS President Under Fire For Directing Postal Contracts To Former Associates Resigns (PostalReporter News Blog)
Claims Against USPS Exec Expose Clash of Public-Private Rules (by Stephen Losey, Federal Times)
Las Vegas Casino Image of Statue of Liberty Mistakenly Used on Stamp
When the USPS decided in 2010 to feature the Statue of Liberty on its new “Forever” stamps, it advertently went with the Las Vegas version instead of the New York one. Postal officials thought they were printing an image of the real Statue of Liberty. But a stamp collector noticed some oddities with the new stamp, such as the rectangular patch on the statue’s crown—a feature that only exists on the replica outside the New York New York casino in Las Vegas, Nevada.
By the time the mistake was discovered, the Postal Service had already printed and distributed 1.5 billion of the stamps. “We still love the stamp design and would have selected this photograph anyway,” USPS spokesman Roy Betts told The New York Times, in an attempt to rationalize the agency’s blunder.
Wrong Statue of Liberty Featured on USPS Stamps (by Andrea Parrish, NewsyType.com)
This Lady Liberty Is a Las Vegas Teenager (by Kim Severson and Matthew Healey, New York Times)
Mother Teresa Stamp Causes Controversy
Admired for her selfless charity work for the poor, Mother Teresa nonetheless became the center of controversy in 2010 when the USPS tried honoring her with a new stamp. Atheists and other opponents criticized the Postal Service for using an image of Mother Teresa, citing the agency’s own regulations about not portraying religious figures on stamps. “Stamps or stationery items shall not be issued to honor religious institutions or individuals whose principal achievements are associated with religious undertakings or beliefs,” reads the USPS rule.
USPS spokesman Roy Betts said Mother Teresa was not honored because of her religion, but for “her work with the poor and her acts of humanitarian relief.” He added, “This has nothing to do with religion or faith.” But even the USPS press release noted the nun’s “divine inspiration” for her charity work.
The Freedom from Religion Foundation urged its supporters to boycott the stamp and write letters to spread the word of her “darker side,” according to Fox News.
The Pacific Justice Institute, a conservative legal defense organization, rebuked the foundation for its opposition. “Just when you think the atheists and anti-religionists have run out of things to complain about, they attack Mother Teresa, one of the great role models of the last century,” President Brad Dacus said.
A Postage Stamp for Mother Teresa (by Elizabeth Tenety, Washington Post)
U. S. Postal Service Issues Mother Teresa Stamp (by Jim O’Donnel, Pushing the Envelope Blog)
Postmaster General’s Generous “Retirement” Package
When Postmaster General John Potter retired in 2010 from the U.S. Postal Service, he took with him about $5.5 million in deferred compensation, retirement benefits, and accrued annual leave. His generous retirement package also included two years of outplacement assistance and one year of healthcare insurance from the USPS.
Potter benefited from a 2006 postal “reform” law that permitted the agency to compensate top executives with lucrative pay and benefits packages to help recruit talented executives.
During the last year of Potter’s tenure, the Postal Service reported losses totaling $8.5 billion. Those succeeding Potter weren’t as likely to be so well compensated. Upon his departure, the USPS board decided to tie bonuses and salary increases to the agency’s financial condition.
After leaving the Postal Service, Potter became the CEO and president of the Metropolitan Washington Airports Authority, which runs the airports outside D.C. Prior to that, he had no prior airport management experience.
Outgoing Postmaster General's Golden Parachute (by Ed O’Keefe, Washington Post)
Ex-USPS Exec Jack Potter To Lead Airports Authority (by Ann Marimow, Washington Post)
USPS To Tie Pay, Bonuses To Finances (by Jim McElhatton, Washington Times)
Mail Carriers Pull a “Newman”
Postal carrier Jill Hull of Webberville, Michigan, gain national notoriety in 2008 after the Postal Service caught her storing thousands of pieces of mail. Instead of delivering nearly 10,000 letters and packages, some dating back to 2005, Hull had stuck them in a storage locker. Commentators immediately compared the behavior to that of the ne’er-do-well character Newman on the television comedy Seinfeld.
Hull was not the first mail carrier to shirk on his or her duties. According to the Postal Service there were 333 “Newman” cases (mail stolen, delayed, or destroyed by employees or contractors) in 2008. Hull faced up to a year in jail and $100,000 in fines. She pleaded guilty, saying she stashed the mail because she couldn’t keep up with her route, and in May 2009 received probation.
Detroit Mail Carrier Pulls "a Newman" (by Andrew Greiner, NBC New York)
Postal Workers Behaving Badly (by Ed O'Keefe, Washington Post)
U.S. Postal Service Confuses Wyoming with Colorado
In June 2008, a new stamp from the USPS intended to honor the state of Colorado was found to depict a well-known mountain in Wyoming. Artist Tom Engeman said the drawing was not based on a particular mountain, but was meant to be generic. The stamp was one of 50 meant to commemorate each of the 50 states.
Exclusive: Wyoming Mountain Depicted On Colorado Stamp? (ABC 7 News Denver)
MAD TV Skit Draws Protests & Cancellations from USPS
Even though USPS executives protested and canceled $200,000 worth of USPS ads that were to run on Fox, MADtv aired a controversial segment that featured three postal workers arguing over who had the best reason to go on a killing spree. Although the USPS feared citizens would go on copycat shooting sprees in post offices, no one was hurt in the aftermath of the skit.
MadTV “Postal Workers Gone Postal” (YouTube)
Federal Judge Orders Church-Run Post Offices to Stop Promoting Religion
In April 2007, a federal judge in Hartford, CT, ruled that, in order to maintain separation of church and state, religion had no place in post offices run by churches and other private contractors. A church-run post office in Manchester and 5,200 other facilities were ordered to stop promoting religion through pamphlets, displays, or other materials. The judge also ordered that these facilities be monitored to make sure they were complying with this order.
Judge: Keep Religion Out of Post Offices Run By Churches, Contractors (Associated Press)
Ohio Development Removes USPS-Mandated Mailboxes
In June 2005, controversy about what type of mail boxes residents could have at a housing development intensified when the Lorain (Ohio) Engineering Department removed 104 boxes that had been installed by the U.S. Postal Service. The USPS immediately ordered them to be returned, saying they were federal property and could not legally be removed.
USPS Spent $38 Million Sponsoring a Pro Cycling Team
Between 1996 and 2004, the USPS sponsored a professional cycling team led by Lance Armstrong. According to an audit performed by the Postal Service’s inspector general, although the Postal Service claimed that the deal had generated $18 million in revenue, only $698,000 could be verified.
Postal Service to End Sponsorship of the Team Led by Lance Armstrong (by Richard Sandomir, New York Times)
North Carolina Man Sues USPS for Curtailing His Religious Freedom
In April 2003, a Lenoir, North Carolina, man sued the U.S. Postal Service, charging it with violating his family’s religious freedom. He contended that USPS regulations on mail shipped to troops in the Middle East favored the Islamic faith, and thereby infringed his rights. He had attempted to send a Bible study, Christian comic books, and the book God’s Promises for Your Every Need to his son Daniel R. Moody, a National Guardsman deployed to Kuwait as part of Operation Iraqi Freedom. The younger Moody had requested the materials, but ran into difficulty when the U.S. Customs Service stopped the items, saying they violated policy which states: “Any matter containing religious materials contrary to Islamic faith or depicting nude or seminude persons, pornographic or sexual items, or non-authorized political materials is prohibited.” The regulation also bans pork products and alcohol.
Two Pension Funding Issues Left Unsettled by 2003 USPS Law
In 2003, the Postal Civil Service Retirement System Funding Reform Act suggested several ways to deal with declining revenue and decreased mail. However, two pension funding issues were left unsettled by the bill’s passage. The first was what to do with the “savings” to USPS from the reductions in its payments to the Civil Service Retirement Fund allowed by the law. From 2006 on, the law provided that funds be held in escrow, pending further Congressional action. Controversy came from the fact that the money would not be used to deliver mail or support the system. Removing escrow would have added $3 billion to the federal government’s budget, which created an uproar. USPS suggested setting up a separate fund for retiree health benefits.
The second issue concerned a provision of the 2003 law that transferred responsibility from the Treasury to USPS for paying retirement benefits earned by postal employees when they are members of the armed forces, which represented a $27 billion obligation. USPS is the only agency or department that has been exempted by the Treasury, which pays for these benefits for all other federal employees.
In 2010, a USPS Inspector General (IG) report claimed that the Office of Personnel Management forced USPS to pay an unfairly large share of the Civil Service Retirement System pension costs of veteran postal workers. The overpayment reportedly began in the 1970s and had reached a cumulative total of $75 billion through 2009. The IG recommended that the U.S. Treasury credit $75 billion to the Postal Service, with most of the money to fully fund retiree health benefits. The proposed FY 2012 budget assigns $11 billion relief to the USPS in the form of a relaxed schedule of retiree health benefits payments and repayment over 30 years of USPS federal retirement fund overpayments. The USPS claims it cannot afford to pay the roughly $5.5 billion in retirement and health-care costs that are now due by law.
In 2011, the USPS halted its pension fund contributions for employees covered under the Federal Employees Retirement System (FERS) as a cost-cutting measure, claiming it can afford to do so because it has a $6.9 billion surplus in employer contributions in the FERS pension account. The payments amounted to $115 million every two weeks, and suspending them will reportedly free up $800 million this fiscal year.
Pension Issues Cloud Postal Reform Debate (by Nye Stevens, Congressional Research Service) (pdf)
Postal Service suspends payments to retirement fund (by Joe Davidson, Washington Post)
Saving the USPS from Financial Collapse
Since the U.S. Postal Service (USPS) reached a critical state in 2011 with its red ink, Washington has had no shortage of reform proposals to consider for saving the agency from bankruptcy. One of the more dramatic plans, offered by Sen. Joseph Lieberman (I-Connecticut), called for closing 3,700 post offices, ending Saturday mail delivery, and reducing the agency’s workforce by 220,000 employees over four years.
A point of contention not tackled by Lieberman was what, if anything, Congress should do about the mandate it placed on the USPS in 2006, when a new law demanded the agency prefund its retiree health benefits for the next 75 years. The requirement has forced the Postal Service to put aside $5.5 billion annually for 10 years.
In his reform proposal, Rep. Darrell Issa (R-California), chairman of the House Government Oversight Committee, wanted to allow the USPS to default on its retiree health fund obligation. Issa also called for creating a commission to oversee a dramatic restructuring of the agency. Liberals vehemently opposed Issa’s bill, claiming it contained language that could have stripped postal workers of their collective bargaining rights. Issa offered another USPS reform plan that dealt specifically with the special postage rate given to nonprofits. The bill proposed a gradual lowering of the discount on nonprofits’ postage rates as a way to generate more revenue for the Postal Service.
Sen. Susan Collins (R-Maine) objected to the idea of closing thousands of post offices, saying such a move would be devastating to rural communities. She proposed reforming the retiree prefunding mandate, while maintaining Saturday mail delivery and not closing small postal offices.
Yet another reform plan, by Sen. Tom Carper (D-Delaware), would have allowed the USPS to cease Saturday service (which Postal Service executives want) and use projected overpayments into the federal retirement system to satisfy its prefunding requirement on health benefits.
Post Office Wrangling Could Be Preview of Federal Deficit Debate (by Deirdre Shesgreen, The CT Mirror)
Issa’s Postal Service Reform Bill Includes Hidden Union Busting (by Pat Garofalo, Think Progress)
Amid Pension Cuts at USPS, Issa Introduces Postal Reform Act (by Kenneth Corbin,
Nonprofits at Risk of Losing Mail Discounts with USPS Reform Bill (by Eryn Sun, Christian Post Reporter)
USPS Reform May Be on the Way, But Is It Too Late? (Washington Post)
Postmaster General Outlines Postal Service’s New Reality (U.S. Postal Service)
Post Office Reform (Center for Fiscal Responsibility)
Postal Service Overhaul
In 2004, a long-awaited proposal to reorganize the Postal Service met with opposition when businesses objected to a provision backed by the largest postal workers union. The law, backed by Rep. John M. McHugh (R-New York), would change the way the Postal Service sets mail rates and attempt to separate the agency’s First-Class Mail monopoly from its competitive services, such as package delivery. A presidential commission reported that without an overhaul, the Postal Service faces an ever-worsening financial crisis because of declining letter mail revenue.
The bill ran into trouble over a section dealing with discounts the Postal Service offers mailers who presort and put bar codes on mail before sending it. This saves the Postal Service money, but labor unions wanted to limit the discounts to just the amount the USPS would save. As written, it would mean higher rates for all retailers.
Writers of the reform bill had trouble drafting a version that pleased all sides. The Postal Service, nonprofit mailers, package delivery companies and labor unions have struggled over the issue for the better part of a decade, and McHugh has been at the forefront most of that time through his chairmanship of postal-related panels.
The controversy arose before the bill actually became available. The House Government Reform Committee released a “discussion draft” just two days before the scheduled vote in committee, a period one official called too short to allow a full debate. The official said the section on postal discounts, known as workshare discounts, could raise postal rates by as much as $50 million a year.
A postal reform bill had also gained momentum in the Senate. That bill, drafted by Sen. Susan Collins (R-Maine) and others, replaced the Postal Rate Commission with a Postal Regulatory Commission that would have broader oversight authority. The proposal also generally limited postal rate increases for first-class mail to the consumer price index and created a separate fund for revenue generated by the Postal Service’s competitive products.
As lawmakers began taking up postal overhaul bills, several interest groups—including commercial mailers, postal competitors, consumer groups and labor organizations—watched closely and prepared to redouble their lobbying efforts for postal reorganization nearly a decade in the making.
A decline in mail volume and a steady rise in delivery points and expenses will cause postal price increases and major job losses nationwide if the delivery service is not reformed, according to a group pushing for change. Maine would lose an estimated 3,500 to 7,000 jobs, depending on whether the drop in volume proves to be 10% or 20%, the Envelope Manufacturers Association argued in its study. According to the association report, some of the threatened organizations include the Postal Service, which is the seventh largest employer in Maine, with more than 4,400 workers, as well as paper manufacturers, printers, and catalog companies.
Finally, on December 20, 2006, a decade of legislative wrangling came to an end when President George W. Bush signed the Postal Accountability and Enhancement Act of 2006 (pdf). The measure provided the Postal Service with the financial and structural flexibility it needed to compete in the Information Age. With First-Class Mail being steadily siphoned away by email and other electronic communication, the USPS needed the freedom to react to market conditions, develop new products and services, and adapt its business model in order to survive.
Although the postal workers union objected strenuously to one provision—requiring injured postal employees to wait three days before beginning Continuation of Pay benefits—the union played a crucial role in developing many of its most important provisions. The law was the first substantive overhaul of the Postal Service since the Postal Reorganization Act of 1970.
Postal Reform bill hits snag; lawmakers scramble to rewrite it (PostalReporter.com)
Should the Postal Service Be Privatized?
Practically since the beginning of the Postal Service, there has been a contentious debate about USPS’s monopoly on the sorting and delivery of mail across the country. While government postal systems around the world have faced increasing competition from delivery services such as Federal Express, DHL, and United Parcel Service, the USPS has remained the carrier of choice for the federal government. As a federal department, the USPS can set postal rates and raise them as it sees fit with little or no competition to meet the needs of the average consumer. Current debate has centered on whether the country would be better served by privatizing the USPS.
During the years 1839-1851, the USPS faced its first serious challenge to its monopoly. A number of congressmen feared the Postal Service was on the verge of an involuntary privatization. Because the monopoly profits garnered by the post office were important to politically powerful interest groups, the federal government did not allow the USPS to be privatized. In order to reduce competition, however, rates were dropped drastically and various reforms were adopted.
For many years, the Postal Service’s monopoly power allowed it to earn huge profits, or “rents,” on important routes. But unlike in other countries, the USPS returned almost no revenue to the general fund. Instead, it reported losses; large profits were distributed internally. The Postal Service also distributed these revenues to groups with political power in order to buy influence and favors.
The Postal Service’s large hidden profits caused postal rates to rise relative to the cost of transportation. Private competitors, even as far back as the mid-19th century, delivered mail efficiently, and at lower rates. Congress was forced to lower rates again and again to stay competitive.
Further hurting the Postal Service’s bottom-lines were two additional factors:
The most controversial challenge to the monopoly of the Postal Service came from Lysander Spooner, who formed the American Letter Company to deliver mail between New York, Boston, Philadelphia, and Baltimore to challenge the USPS’ monopoly. The Articles of Confederation of 1778 had vested the Congress with the “sole and exclusive right [of] … establishing and regulating post offices.” The Constitution had simply granted “the power to establish post offices and post roads.” This language led many, including Justice Joseph Story, to doubt whether the power the Constitution gave to set up posts and post roads was intended to be exclusive. Spooner used his own money to buy newspaper advertisements urging cooperation from the federal government to bring the matter before the Supreme Court. The Postmaster General was unwilling to cooperate, though, and Spooner was driven out of business when the government seized his mail.
According to the Government Accountability Office, “The monopoly was created by Congress as a revenue protection measure for the Postal Service’s predecessor to enable it to fulfill its mission. It is to prevent private competitors from engaging in an activity known as ‘cream-skimming,’ i.e., offering service on low-cost routes at prices below those of the Postal Service, while leaving the USPS with high-cost routes.” The law that prohibits anyone except the USPS from placing mail in a private mailbox was also passed for the purpose of preventing loss of revenue to the post office.
Besides the prevention of revenue loss, the 1934 legislation was passed for another reason. “Congress sought to decrease the quantity of extraneous matter being placed in mail boxes.” Until 1979, competition in all letter mail was prohibited. However, faced with imminent legislation to exempt “urgent” letter mail from the monopoly, the Post Office decided on its own to exempt “extremely urgent” letters. Competition in “extremely urgent letters” was allowed under certain conditions: The private carrier must charge at least $3 or twice the U.S. postage, whichever is greater (other stipulations, such as maximum delivery time, applied as well); or, alternatively, it may be delivered for free. This is where carriers such as FedEx compete by offering overnight delivery, as well as where bicycle messengers compete for intra-city mail.
However, the private carrier of the urgent letters must not use the standardized mailboxes marked “US Mail.” Hence, private carriers of urgent letters must deliver packages directly to the recipient, leave them in the open near the recipient’s front door or place them in a special box dedicated solely to that carrier (a technique commonly used by small courier and messenger services). According to the American Enterprise Institute, the United States is the only country that has such a mailbox monopoly.
Since the mail monopoly only applies to non-urgent letter mail, the USPS is losing a significant amount of business to their competitors in other services, who offer lower rates. For example, FedEx and others have captured 90% of the overnight mail business.
Should the United States Postal Service Be Eliminated? (Buy Like Buffett)
The post office is broken and can’t be fixed, say those who believe privatization is the best move for the USPS. Because of its position as an untouchable monopoly that is subsidized by the federal government no matter how poor its performance, the USPS has no real reason to want to improve. Give private industry a chance to sort it out, or figure out how to offer more services at a more competitive rate, say privatization proponents.
Also, because the federal government has traditionally been slow to counter challenges from private mail carriers, the post office has lagged one step behind the business world, which is nimbler and more capable of making the necessary changes to remain competitive. In contrast, the reactionary stance of the USPS only makes it have to continually lower its prices in order to stay competitive. This results in an endless cycle of less money coming in, which forces cuts in services and personnel and results in longer lines and greater irritation for consumers, who then look for other options.
Many on the political right who advocate laissez-faire capitalism are critical of USPS’s monopoly. Economists have argued that having laws that make it illegal for anyone else to carry mail decreases competition and instead raises prices. Because the USPS is a huge organization, many say their scale alone should make it possible to drop the price of stamps, not raise them on a consistent basis. Lastly, some say that the USPS has an unfair advantage and should be subject to the same rules as private carriers, such as paying taxes, following state and local regulations, and being subject to antitrust laws.
Privatize This (by Sam Ryan, National Review)
Burrus Testifies Before Senate: USPS on Path to Privatization (American Postal Workers Union)
Critics of privatizing the USPS often cite the worry of increased prices and less centralizing or standardization for mail delivery. Another big worry is the fate of rural citizens, who depend on the mail for their main source of information. Those against privatizing the Postal Service argue that living in thinly populated areas means that transportation costs must be expanded to meet delivery demands. Often, urban areas like the Northeast end up subsidizing more rural areas because they bring in more revenue when factored against transportation costs. If the Postal Service were run by private corporations, they could decide not to provide mail to those areas or to provide fewer overall services. That would leave the burden on districts that may not be able to afford their own post office, and thus limit access to information.
The Postal Service argues that their monopoly is necessary to fulfill its mission “to provide for an economically sound postal system that could afford to deliver letters between any two locations, however remote.” If private carriers were allowed to compete, they say, the post office would not be able to deliver mail to every American at the same price. The department also stresses that electronic mail will provide enough of a hit to their bottom line to make talk of privatization unnecessary and irrelevant going forward.
Union President Condemns USPS Plans to Privatize AMCs (American Postal Workers Union)
A list of former postmasters general can be found here.
The son of a 40-year Postal Service veteran, John E. Potter served as the 72nd Postmaster General and Chief Executive Office of the United States Postal Service beginning on June 1, 2001. He stepped down from the position in December 2010.
Potter earned a degree in economics from Fordham University. His master’s degree is in management from the Sloan Fellows Program at the MIT Sloan School of Management. Potter began as a distribution clerk in Westchester, New York, in 1978 and has served as chief operating officer, vice president of labor relations, and in a number of other senior operational positions both at headquarters and in the field.
In April 2002, Potter submitted the USPS Transformation Plan to Congress to help address problems within the USPS threatening financial and commercial viability, especially those of technology. This became the partial basis for the Postal Reform and Accountability Act in late 2006.
Potter had served on the Postal Service Board of Governors and was vice chairman of the International Post Corporation, an association of 23 national posts in Europe, North America and Asia Pacific. He also served as chairman of the Kahala Posts Group, an Asia-Pacific alliance that includes the United States, Australia, China, Hong Kong, Japan, and Korea.
Potter is currently President and CEO of the Metropolitan Washington Airports Authority, a position he has held since July 18, 2011.
Postmaster General John Potter leads a cry for retrenchment (by Ed O’Keefe,
Patrick Donahoe assumed the office of Postmaster General of the United States Postal Service (USPS) on December 3, 2010, and was officially sworn in on January 14, 2011.. He oversees an agency that has about 580,000 employees in more than 33,000 facilities, delivering nearly half the world’s mail and with an annual revenue of $68 billion.
The son of a 40-year Postal Service veteran, John E. Potter served as the 72nd Postmaster General and Chief Executive Office of the United States Postal Service from June 1, 2001, until December 3, 2010.
John Potter embraces employees and competition to improve USPS’ performance (by Trudy Walsh, Government Leader)