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Final Myth vs Fact

Final Myth vs Fact

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Published by: House Oversight Committee on Aug 10, 2011
Copyright:Attribution Non-commercial


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H.R. 2309, the Postal Reform Act of 2011Myths/Facts
Myth #1: The crisis at the United States Postal Service(USPS) is temporary, caused by the recession.Fact: Increasing use of electronic, paper-free technology hascaused a permanent decline in mail usage. USPS has nobusiness model to cope with this reality.
A recent Businessweek cover story illustrated USPS’s failed business model: “Paul Vogel, a
former letter carrier who is now the postal service's chief marketing sales officer…. his job is topersuade banks to keep sending paper statements in the mail. It's a losing battle, and Vogelknows it. "Inevitably, it's going to go to those new technologies," he sighs.”According to the same story, Phillip Herr, the Government Accountability Office’s expert on thePostal Service, “is struck by how many USPS executives started out as letter carriers or clerks.He finds them so consumed with delivering mail that they have been slow to grasp how swiftlythe service's financial condition is deteriorating. "We said, 'What's your 10-year plan?'" Herrrecalls. They didn't have one.’”In 2001, 80% of household bill payments were made by mail, by 2009 that number dropped to54% and today it is almost certainly below 50%. First-Class Mail, which is three times moreprofitable than Standard Mail, is more than 25% off its peak volume and is no longer a majorityof USPS revenue. The decline is permanent, and it is driven by the transition to online bankingand bill payment and the shift to email for personal correspondence.
Myth #2: USPS has cut its costs.Fact: Costs are increasing. Any potential savings are beingoverridden by rising costs, especially for compensation andbenefits.
One senior Postal official recently cited workforce reductions through retirements in the lastdecade as evidence of cost cutting saying, “We know how to cut costs.”In reality, even as USPS revenues dramatically and predictably decline the Postal Service hasfailed to meaningfully cut its expenses. During the first 8 months of this fiscal year, USPSrevenues declined more than $1.2 billion but USPS expenses actually increased by $281million.
Myth #3: USPS receives no taxpayer support.Fact: USPS has received billions of dollars in indirecttaxpayer subsidies over the years.
USPS benefits from preferential local, state, and federal tax treatment that results in an indirectsubsidy, or tax expenditure, from all levels of government. USPS is exempt from the following:
Local, State, and Federal Income Tax
Property Tax
Motor Vehicle Registration
Parking Tickets
Like Fannie Mae and Freddie Mac, USPS can borrow money at very low interest ratesfrom the U.S. Government; USPS borrows money through the U.S. Treasury paying lessthan 1% interest on some debt. The Postal Service has a $15 billion line of credit withU.S. Treasury.
Myth #4: Postal Reform Act Increases Regulation.Fact: Postal Reform Act Eliminates 14 of the most costlyregulations and unfunded mandates on USPS, more than anyother postal reform measure.
The Postal Reform Act will free the Postal Service from burdensome and costlyregulations.
Key Deregulations:1. Eliminates the mandate requiring 6-day delivery of mail.2. Eliminates the prohibition on closing small post offices solely for operating at a fiscaldeficit.3. Relaxes other statutory provisions that increase USPS ability to manage its own retailnetwork.4. Eliminates the cumbersome appeals process for post office closures if a contract postalunit is opened nearby, which would be much more cost effective.5. Streamlines the existing appeals process for post office closures by reducing themaximum time for regulatory review from 120 days to 60 days.6. Streamlines Postal Regulatory Commission (PRC) review of USPS proposals tosubstantially alter USPS’s retail network to no more than 90 days.7. Streamlines PRC review of any proposal that is substantially similar to a proposal thathas already been reviewed by the PRC to no more than 90 days.8. Eliminates prior regulatory review of similar negotiated service agreements withindividual mailers.9. Eliminates the requirement for USPS’s governing board to approve similar rateagreements, allowing the Postmaster General to act instead.10. Exempts USPS from costly prevailing wage laws that drive up contracting costsincluding the Davis-Bacon Act and the Service Contracting Act.11. Broadens USPS authority to offer non-postal services by allowing USPS to selladvertising and offer state government services in postal facilities.12. Removes a statutory rate preference for national and state political committees thatamounts to an unfunded mandate.

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