Oversight Committee Launches Postal Reform Site

Thursday, September 1, 2011 10:11 AM by Jacob Feldman

Today, Chairman of the House Oversight Committee Darrell Issa announced the launch of a new website, SavingThePostalService.com, an effort to publicize the growing burden the taxpayer-subsidized mail service has on Americans. Rep. Issa has already introduced legislation that would make essential reforms to the US Postal Service, which overspent its budget by $7.5 billion in 2010, profligacy that is expected to grow to an $8 billion deficit in 2011.

As a government-run organization, the Post Office is isolated from the innovation of marketplace competition. Unlike its private sector competitors, the Postal Service does not pay the corporate income tax, is exempt from anti-trust laws, and is advantaged by unique customer access opportunities such as having mailboxes on the street.

Despite these legal protections, USPS spends in the red while generously paying employee benefits above and beyond levels for other federal workers. While postal workers only pay 21 percent of health care costs and none of their life insurance premiums, federal workers pay 28 percent of healthcare costs and are responsible for 100 percent of their life insurance costs. If Post Office employees were paid at equivalent levels as other federal workers, $1.4 billion could be saved.

Other key reforms in the Postal Reform Act of 2011 include:

• Save $4 billion by closing half of the Post Offices in areas with low demand and high capacity
• Save $6 billion by cancelling weekend delivery

Compared to the private sector, over 80 percent of the Post Office’s costs are labor related, while FedEx and UPS spend 20-40 percent less. Even if Post Office workers were paid equally with federal workers, there are still more potential savings by paying workers a market equivalent wage. The Americans for Tax Reform Foundation’s 2011 Cost of Government Day report further explore the burden place on taxpayers by the government-run Post Office. The report identified savings of $19.87 billion annually and provides a serious discussion about privatizing the service and letting the free market work. You can read the report and related case studies here.

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