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'Congress Should Move Ahead to Assure the Long-Term Vitality of the Nation's Postal System'

‘Congress Should Move Ahead to Assure the Long-Term Vitality of the Nation’s Postal System’

Following is Executive Vice President Ivan D. Butts’ statement to the Senate Committee on Homeland Security and Governmental Affairs at its March 12, 2019, hearing on recommendations from the President’s Task Force on the U.S. Postal System:

Chairman Johnson, Ranking Democrat Peters and members of the Homeland Security and Governmental Affairs Committee, thank you for permitting me to provide the views of the National Association of Postal Supervisors (NAPS) on the President’s Task Force on the U.S. Postal System. My name is Ivan D. Butts; I have the honor of serving as executive vice president of NAPS, representing approximately 27,000 postal supervisors, mid-level postal managers and postmasters who are employed by and retired from the U.S. Postal Service. Our members help ensure the high quality of the postal services American citizens expect and deserve.

I also thank you for holding today’s hearing to provide review of the recommendations of the President’s Task Force on the Postal System and their contribution to a universal, accessible and affordable postal system.

Today and tomorrow, over 500 NAPS delegates are meeting with their senators and representatives to advocate for a sustainable and vibrant Postal Service. Their meetings are intended to impress on members of Congress the importance of enacting consequential and constructive postal legislation. NAPS members have an intimate and abiding reverence for the Postal Service, including the important role the federal agency plays in the U.S. economy and our nation’s social fabric.

As the committee has noted in the past, our nation’s postal system was established by the founders of this nation as a constitutionally enshrined and congressionally authorized government function. Indeed, binding our nation together remains the core mission of the American postal system. Consequently, any attempt to privatize the U.S. Postal Service that strays from these roots of American exceptionalism should be met with firm resistance.

American commerce relies on the strength of a universal mail system that does not discriminate on the basis of the geographic location of the sender or recipient, or the distance between the two. The president’s task force recognized the reach of the Postal Service and the uniqueness of its mission in noting:

“In FY 2018, the U.S. Postal Service delivered 146 billion pieces of mail to 159 million delivery points, including to rural and remote locations. Private carriers charge many of these locations a delivery surcharge, limit the services offered to these locations and, in a few cases, offer no service at all.”

Indeed, our national postal system is distinctive and valued. That stature, the task force noted, continues into the digital age. The task force recognized, although it was unable to quantify the economic impact of postal commerce, that “the USPS’s economic impact is substantial in both its direct activities and in the broader economic activity that it enables.”

The economic footprint of the Postal Service comprises an irreplaceable network of post offices, processing facilities, transport vehicles and delivery routes, staffed by expert, efficient and dedicated employees. The reliability and integrity of the postal network enable our Postal Service to be ranked the most trusted and approved federal agency; that trust is irreplaceable. As Congress and the White House strive to equip the Postal Service with the tools necessary to preserve its future, let it be based on that trust and the expectations of Americans that the value of its postal system be preserved.

NAPS believes legislation introduced in the 115th Congress should serve as the foundation of action in this, the 116th Congress. The bipartisan measure considered and advanced in the House of Representatives was a legislative product endorsed by multiple postal stakeholders, including NAPS. The House Committee on Oversight and Government Reform voted overwhelmingly to favorably report H.R. 756 for floor action. The bill subsequently was reintroduced by Reps. Mark Meadows and Elijah Cummings as H.R. 6076, subsequent to retirement of the bill’s author, former committee Chairman Jason Chaffetz.

In the Senate, bipartisan legislation, S. 2629, introduced by Sens. Tom Carper and Jerry Moran, provided a firm foundation for postal reform. The Senate bill reinforced the importance of Postal Service standards, especially for rural America. NAPS understands there needs to be modifications to both bills to garner broader support and better address the unique interaction between the Federal Employees Health Benefits Program (FEHBP) and Medicare.

The authors of the previous Congress’ legislation and NAPS believe three factors conspired to undermine the finances and operations of the Postal Service: the evolving composition of the mail mix, the debilitating impact of the 2006 congressional requirement to prefund future retiree health benefits and the lingering after-effects of the 2007-2008 recession. The task force correctly diagnosed some of the problems and proposed remedies for a number of governance issues that could be resolved fairly quickly. However, certain operational and fiscal recommendations offered by the task force would irreparably harm the postal system.

NAPS commends the task force for acknowledging that current vacancies on the Postal Board of Governors pose a huge obstacle to formulating a strategic plan to achieve postal sustainability. The current absence of a board quorum precludes the Postal Service from providing the postmaster general and senior postal staff with the requisite guidance to respond to evolving market conditions. It also hinders the agency’s ability to make critical policy decisions that, when necessary, could be reviewed by the Postal Regulatory Commission and then implemented. This especially applies to introducing innovative products and services to the American public.

Consistent with the task force recommendation, the Postal Service needs to articulate how its core competencies will enhance opportunities to generate revenue and increase foot traffic in postal retail facilities. Partnering with other federal agencies, as well as state, county and local governments, the Postal Service should be encouraged to identify for-fee service products that require identity or address verification and constitute eligible sources of revenue. In addition, Postal Service acceptance, processing and delivery of alcoholic products would provide significant potential for added postal revenue.

While NAPS appreciates the task force not sanctioning privatization of the Postal Service, we would welcome clarification relating to the report’s apparent variance with the June 2018 White House Office of Management and Budget proposal to reorganize the federal government, “Delivering Government Solutions in the 21st Century: Reform Plan and Reorganization Recommendation.”

Two task force members took part in drafting the June 2018 document, which, in part, suggested postal privatization, akin to foreign postal privatization efforts. NAPS would hope that the committee and the White House appreciate how foreign and radical postal changes could inflate postage rates and eviscerate universal postal operations.

Finally, NAPS applauds the task force for endorsing revising the calculation of the postal health liability to include only those employees nearing retirement. Taking into account only the financial liability of postal employees statutorily entitled to FEHBP coverage (i.e., employees within five years of retirement with five years of uninterrupted health coverage) would significantly reduce the Postal Service’s health insurance liability.

However, NAPS advises the committee to take the task force recommendation one step further. We recommend that the Postal Retiree Health Benefits Trust Fund be invested in conservative vehicles that historically have a better rate of return than the Treasury obligations in which the funds presently are invested. A long-term vehicle, structured consistent with the goals of the long-term Thrift Savings Plan L Fund, would represent a sound step. A percentage point increase in the rate of return, accomplished through the L Fund, could yield an almost $20 billion reduction in the health liability.

Despite some positive recommendations, a number of task force recommendations are problematic. They would clash with the committee’s attentiveness to rural mail service, destabilize postal rate-setting and reduce mail volume. The task force proposes to dramatically narrow the scope of the universal service obligation to include mail and postal services deemed to be “essential.”

Generally, “essential” mail is defined by the task force as being products and services for which there is no “nationwide, private” substitute. Consequently, the task force suggests that uniform service standards or pricing should apply only to correspondence, transactional mail, drug prescriptions, government mail and recall notices. Everything else would be profit-driven.

Therefore, so-called non-essential products, including small parcels from home-based businesses or non-residence-to-residence packages addressed to rural areas or originating there, would be destination-priced and delivery-saturation scheduled. Under this flawed approach, mailing products to rural and low-density areas would become more expensive and delivery frequency would be slashed.

The task force recommendations also seek to constrict the universal service obligation. The task force proposes to sell mailbox access to private-sector postal competitors, which would compromise the historic sanctity of the residential and business mailbox. It would expose mail recipients to breaches of privacy and undermine Americans’ trust in the Postal Service.

The committee should assure all Americans that only a government-employed postal designee will have access to the mailbox. Vacation stops and mail-forwarding services provided by the Postal Service should not be delegated to private messengers to avoid risk to the integrity of the mailbox. The combination of universal service obligation reduction and opening the mailbox would devalue the mail and the stability of the Postal Service.

Finally, NAPS strongly objects to the task force recommendations to increase Federal Employees Retirement System (FERS) contributions and to eliminate FERS coverage for future Postal Service employees. Our opposition applies to this proposal, as well as a similar proposal in the president’s Fiscal Year 2020 budget proposal. For current postal employees, this proposal would be tantamount to a $4,000-plus pay cut, annually, after six years. Increasing the employee contribution, absent an increase in pension value, is punitive and unfair.

In conclusion, NAPS encourages the committee to move ahead toward approval of a postal reform measure that reflects the Postal Service’s statutory responsibility to bind the nation through universal service to our citizens and ensure postal accessibility, security and reliability. The task force made a meaningful contribution to the discussion, but Congress should move ahead, consistent with its constitutional authority to establish post offices and post roads, to assure the long-term vitality of the nation’s postal system.

NAPS looks forward to working with you, Mr. Chairman, and the members of this committee to drafting the legislative framework for a vital, sustainable and vibrant Postal Service.