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Commissioner says radical change needed for U.S. Postal Service to survive

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WATERTOWN — Radical changes have to be made to the structure of the U.S. Postal Service for it to survive, according to Postal Regulatory Commissioner Robert G. Taub, the keynote speaker during a luncheon Thursday at the Black River Valley Club on Washington Street.

Mr. Taub discussed the many hurdles facing the nation’s Postal Service at the luncheon, hosted by the Central New York Postal Customer Council. He has served as commissioner since October 2011, following his nomination by President Barack Obama and confirmation by the Senate. Before being appointed commissioner, Mr. Taub served as a special assistant for Secretary of the Army John M. McHugh since October 2009. He also served as chief of staff for Mr. McHugh over the preceding decade, when Mr. McHugh was a U.S. representative of the 23rd Congressional District.

To emerge from financial uncertainty, the business model of the Postal Service will have to be completely reinvented to reflect the actual mail use of Americans, Mr. Taub said. In 2013, total mail volume delivered by the agency dropped to the lowest levels seen in nearly 27 years, a decline that has continued this year. He attributed that decline to the economic recession that began in 2007, along with people increasingly using electronic media to communicate.

“The question now confronting our nation is, will the mail always be there?” Mr. Taub said.

The Postal Service, which will celebrate its 239th birthday this year, is a $67 billion operation with about 500,000 employees, Mr. Taub said. Contrary to the belief of some, the Postal Service does not depend on taxes for revenue. It relies entirely on the sale of its products, services and mail to fund operations. The Postal Regulatory Commission is responsible for determining the legality of the agency’s prices and product offerings and policing competition.

Statistics show the Postal Service’s financial standing is bleak. The Postal Service ended 2013 with a net loss of almost $5 billion, Mr. Taub said. Its net loss from 2007 through 2013 was $37.8 billion. So far in 2014, its net loss is about $2.2 billion. It has reached its borrowing limit, and it expects mail volume to continue to decline.

Aggressive measures to end the agency’s ongoing operating loss have been taken, but they haven’t stopped the downward slide, Mr. Taub said. The agency reduced its workforce by about 200,000 career employees over the past seven years and made operational cuts of about $15 billion, he said.

But the agency doesn’t have cash to pay down its debt or much-needed capital to invest in its business. Its liabilities exceed its assets by $42 billion, but it needs more than $10 billion to invest in package rotation equipment, delivery vehicles and other deferred investments.

“If a downturn in the economy or other circumstances further stress the Postal Service’s cash flow, it risks not being able to pay some of its bills and could — in the extreme — run out of cash,” Mr. Taub said. “It currently estimates that it has only 14 days of liquidity.”

Even so, the Postal Service has many strengths, Mr. Taub said. The agency serves 150 million American households and businesses on a normal day, supports trillions of dollars in commerce and supports a $900 billion mailing industry that employs nearly eight million people.

For the Postal Service to survive, it will have to adapt to changed use of the mail by consumers, Mr. Taub said. He contended that the federal government should clearly redefine what “universal mail service” actually entails, establishing specific standards for mail delivery and retail access.

“Unlike other countries, the universal service obligation in the United States is largely undefined, and is instead comprised of a broad set of policy statements with only a few legislative prescriptions,” Mr. Taub said.

“The lesson seems that policy makers really need to start at the beginning and decide what we, as a nation, need and expect and how it can be funded,” he said.

It’s unlikely that Congress will take comprehensive action to overhaul the structure of the Postal Service, though, unless there is a financial meltdown, Mr. Taub said. Senate and House of Representatives committees that oversee the agency have attempted to pass legislation to address problems, but those proposals remain because they haven’t yielded enough support from lawmakers.

“While certainly helpful, none of the proposals undertake a fully comprehensive examination of what it is that we as Americans want,” Mr. Taub said. “What is universal service, and how do we pay for it?”

Closing his speech on a positive note, Mr. Taub said he is confident that the strength of today’s Postal Service is capable of carrying it through its financial crisis.

“Despite the very serious and real problems, let’s keep in mind the good news — the strength of the system — and take some degree of hope, knowing that this is the foundation that Congress and the administration can build upon to find solutions,” he said. “Even if there is not legislative change, the strength of the system is the engine that will ensure the Postal Service will continue to meet its obligation to deliver.”

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