President Donald Trump’s proposal to restructure the federal government includes a suggestion to privatize the postal system, or at least turn it into a sustainable business model.
The wide-ranging proposal, unveiled Thursday in a 132-page document, is something of a jumping-off point the White House hopes will inspire discussions of how to align the government with conservative principles and make it more efficient.
The difficulty with reforming the U.S. Postal Service (USPS), which posted a $2.7-billion loss at the end of the 2017 fiscal year, and has $100 billion in unfunded liabilities, is that the government is charged in the Constitution with the task of establishing post offices and roads.
“The Congress shall have Power To establish Post Offices and post Roads,” the postal clause states. That constitutional authority to establish post offices has often been interpreted as a mandate for the government to also run the USPS. But “nothing in the Constitution forbids Congress from privatizing the Postal Service,” Kevin Kosar, vice president of policy for the R Street Institute, told The Daily Caller News Foundation.
Parts of the mail delivery system have been outsourced to private firms since the beginning of the country, Kosar said.
“Tavern owners have served as postmasters, steam boat owners had contracts to carry mail, and today private companies haul and fly mail,” he said. “The Constitution merely authorizes Congress to establish post offices and postal roads. It does not require government to own or operate postal operations. Indeed, the famed Pony Express of the 19th century was a private company.”
The USPS receives no taxpayer money for operating expenses, but Trump has been concerned that the independent agency will need a government bailout in the future. (RELATED: Trump Wants Post Office To Stop Being Amazon’s ‘Delivery Boy’)
“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” Trump said in an April executive order calling for a task force to devise proposals to reform the agency. It’s unclear if Thursday’s government overhaul proposal is part of that task force.
“USPS is caught between a mandate to operate like a business but with the expenses and political oversight of a public agency,” the Thursday proposal stated.
The president’s government reform proposal suggests allowing the USPS “to follow private sector practices in compensation and labor relations” rather than “prescribing participation in costly Federal personnel benefit programs.” The USPS defaulted on pension-related payments for the first time in 2018.
“A privatized Postal Service would have a substantially lower cost structure, be able to adapt to changing customer needs and make business decisions free from political interference, and have access to private capital markets to fund operational improvements without burdening taxpayers,” the proposal stated, noting that postal services in many European countries operate as private enterprises with substantial government oversight.
Revenue from the USPS has been troubled in the past few decades as businesses have started sending fewer letters and more packages. Even though parcel deliveries have higher profit margins than letters, they also strain the infrastructure due to varied sizes and space considerations.
The post office has asked Congress to allow it to raise prices and to negotiate personnel contracts. Postmaster General Margaret Brennan said Thursday she would work with the president to reform the Postal Service’s “flawed business model,” The Wall Street Journal reported.
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