As some long-time readers of this blog may know, some forty years ago, I served briefly as a legislative director to a Congressman. One of my duties was to handle the staff work for one of his subcommittees – the one dealing with appropriations for the U.S. Post Office [before it was theoretically made an independent agency]. Way back then I raised the issue as to why the Post Office was basing its revenue on first class mail rates and treating bulk mail as a marginal cost. Over the years, I’ve raised this issue, and to this day, no one seems to want to deal with it.
Last quarter, the Postal Service lost $5 billion, and those concerned in the USPS and Congress keep talking about raising first class rates, closing post offices, and eliminating Saturday delivery. None of these steps will address the problem.
The vast majority of my mail – measured by weight, not rate class – is either bulk advertising mail, reduced rate charitable solicitations, or periodical reduced rate mail. I’ve asked a number of people with various Postal Service profiles, and that seems to be true of all of them as well. As first class rates have soared, first class volume has declined, and periodical and bulk [junk] mail make up as greater and greater percentage of Postal Service deliveries, again by weight. But weight is what counts! Ask FedEx and UPS. They charge by a combination of weight and speed of delivery.
The problem is that USPS “bulk,” periodical, and “non-profit” rates aren’t literally carrying their weight… or paying their freight. But neither the USPS management nor the Congress has wanted to face the fact that these rates are too low, because, in effect, the USPS inherited built-in subsidies adopted for political purposes. Some of those purposes are still political. For example, all members of Congress have a “franking” privilege that allows them to send letters to their constituents over their signature on the envelope for literally pennies. The direct mail industry is being subsidized as well, as are non-profit organizations and periodicals. If I’ve read the rate charts correctly, advertising mail and periodicals are charged at slightly over twenty cents a pound[ or in some cases twenty-one cents for the first three ounces], while first class letters are now forty-five cents an ounce.
If Congress wants those subsidies to continue, then it should fund the USPS deficit… but in this time of fiscal difficulty, it won’t do that, and it won’t force the USPS management to adopt a realistic and practical rate structure, because churches, political organizations, direct mailers, and Congress itself would all have to pay more. Instead, the everyday Americans who don’t like all the junk mail and political and endless charitable solicitations are faced with poorer service and higher prices for personal communications – and not all of us can or want to pay our bills electronically. Nor can we, since it’s not possible for all businesses or for all individuals. Nor should we have to when those higher postal rates are subsidizing the unrealistically low rates paid by other classes of mail.
It may well be that lower postal rates for periodicals and non-profits serve a greater social purpose, but, if that is so, then Congress should subsidize those rates with public funding. But, as usual, Congress doesn’t want to pay for its privileges [the franking privilege] and doesn’t want to admit the degree to which it wants everyone else to subsidize bulk mail for business, charities, non-profits, and political organizations, all of which apparently have more political clout than the citizenry as a whole.
Not that any of this is surprising, but I have yet to see any public discussion of this aspect of the Postal Service cost structure, not in more than forty years – except for my own comments.