USPS faces competing interests in path to reform

Wednesday - 10/5/2011, 6:27am EDT

Reporter Emily Kopp's latest USPS report on In Depth with Francis Rose

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Interview with PRC chair Ruth Goldway

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As a leading proponent of overhauling the Postal Service argues that the agency needs more flexibility to act like a private business, the regulator that oversees the agency worries that it is losing sight of its public mission.

The Postal Service is expected to post record losses this year, first-class mail continues to lose ground to the Internet, and the agency is running low on cash and struggling to pay its debts. The key to its future may depend on finding the perfect balance between serving the public and making hard-nosed management decisions based on the bottom line.

Rep. Darrell Issa (R-Calif.) is leading the Republican charge to make the Postal Service solvent. Speaking to the Heritage Foundation in Washington on Monday, Issa said laws, contracts and regulations are holding the agency back.

"Give me a $65 billion business that is stagnant to shrinking, that is losing money but can make money, and give me the stock option that goes with it," he said. "I can turn a $10 billion loss into a profit while still giving people good pay if I have the flexibility."

His plan would let a board restructure the Postal Service's financial obligations if the agency was more than 30 days late in paying its bills. Issa estimated the agency would need to shed 200,000 jobs in the next few years to become more efficient. Issa said the Postal Service should model itself after the Army, by requiring retirement-eligible employees to leave.

"The Army tells you, 'You've got your 20 years. Goodbye.' The Army doesn't let you stay until you're ready to retire," he said. "They don't sit there saying, 'We can't lay anyone off.'"

Many postal employees are protected from layoffs by provisions in union contracts.

While still a government agency, the Postal Service is supposed to make strategic decisions like a business. Its funding comes from operations, not tax revenue. And with losses mounting, the agency wants to trim its network of post offices and processing facilities.

But the law prevents the Postal Service from closing post offices in rural areas for economic reasons alone. It also says the agency should provide the same service to all citizens at the same rate, regardless of whether they live in Hawaii, Alaska or the Lower 48.

No one is proposing that the Postal Service stop providing universal service. But the Postal Regulatory Commission, which is required to advise the Postal Service on its proposed network changes, is watching carefully to make sure the agency continues to act in the public interest.

"We have to look at the impact of these proposals with regard to the law to determine if the Postal Service's method for deciding on closing postal offices in rural areas is, in fact, something you can justify for reasons other than economics," said PRC chairwoman Ruth Goldway in a separate interview with Federal News Radio.

A 1971 law requires that the Postal Service not only serve everyone, but also pay for itself. Now, Goldway said, the agency has a dilemma: Is it more important to provide service or to shore up finances?

"The Postal Service wants to break even and be financially sound, and our role is to work with them to strike the right balance," she said. "In their presentations, they have to show how they can continue to provide universal service."

She said the PRC had heard from lawmakers and citizens worried that their local post offices may close.

"We've had hundreds and hundreds of letters from people concerned about it," she said. "If you alienate your customers, will they come back anyway?"

Goldway said the PRC would evaluate this round of post office closings before Christmas. It will also examine the Postal Service's methodology for choosing post offices to close, she said, rather than study each post office individually.

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