Could Postal Reform Be in a Budget Deal?

As budget talks continue, negotiators could turn to postal reform for budgetary savings.

The United States Postal Service is currently in bankruptcy, and losing about $6 billion per year.

In the last Congress, both the House and Senate proposed legislation to improve the finances of the U.S. Postal Service (USPS). Both bills allowed the Postal Service to eliminate Saturday delivery (though the House's version was more aggressive and started earlier), and both relieved the Postal Service of certain contribution obligations (the House version for pensions, and the Senate version for both pensions and retiree health care). In addition, the bills proposed various smaller options to save the USPS money, including allowing it to set rates for many products to cover their cost, encouraging workers to retire, and requiring Alaska to make payments to the Postal Service for bypass mail (rural delivery that does not go through a USPS facility).

In the past, President Obama has also proposed some reforms, including allowing stamp prices to increase faster than inflation and reducing the share of health and life insurance premiums that the federal government pays.

Many of the available savings options are presented below. Importantly, they are measured on a "unified budget" basis. The post office is "off-budget," and many policies which improve its financial status would actually worsen the "on-budget" deficit.

Ten-Year Savings/Costs (-) in Postal Reform Bills (billions)
  Savings/Costs
Allow the Post Office to End Saturday Delivery $20 billion
Increase Postal Employee Health and Life Insurance Premiums $10 billion
Increase the Price of First-Class Stamps by One Cent (above inflation cap) $5-10 billion
Provide the Post Office with Relief for Retirement Contributions -$5 billion
Provide the Post Office with Relief for Health Care Fund Contributions -$10 billion
Increased Credits to Encourage People to Retire  <$1 billion
Require Payment from Alaska for Bypass Mail (Expedited Rural Delivery) $1 billion
Increase Non-Profit Advertising Rate to 80% of Commercial Rate; Allow Increase in Rates to Cover Costs of Certain Types of Mail <$1 billion

Source: CBO

To be sure, postal reform is not easy, and it may be more difficult to do piece-wise -- when savings would not be accompanied with relief -- than all at once.  But policymakers must act to strengthen the financial integrity of the post office and should do so sooner rather than later.

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