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Final Report of the
President’s Commission
on the United States Postal Service:
The Commission is honored to have been asked by President George W. Bush to gather the opinions of postal experts, customers, partners, competitors, and employees and craft a vision “to ensure the efficient operation of the United States Postal Service while minimizing the financial exposure of the American taxpayers.” While the challenges before the Postal Service are substantial, so are the abundant opportunities that exist today to enhance both the value of the mail and the institution that delivers it. If the nation embraces an ambitious modernization, then the Commission is very confident that the Postal Service can continue its 225-year tradition of innovation and adaptation to remain a valued and relevant enterprise to the nation it exists to serve. In making these recommendations, however, the Commission wishes to note that, particularly in today’s technology-driven world, the future has a way of surprising us all. In 1968, the last Presidential Commission on the U.S. Postal Service made important strides in the delivery of the nation’s mail. While it urged greater use of technology to automate the largely manual processes of the Postal Service at the time, that Commission could not have foreseen the coming Internet revolution and its dramatic impact on traditional mail volumes, which so profoundly make the case for ambitious new reforms today. Similar breakthroughs certainly could change the fundamentals underlying the assump-tions made in this report. For this reason, the Commission did not set out to define a Postal Service for the new millennium. Rather, it set a more modest 15-20 year horizon. Additionally, many of the recommendations included in this report aim to build more flexibility into the Postal Service, so key aspects of the institution—from the scope of the postal monopoly to the size of the postal network itself—are not set in stone, but rather are managed in a dynamic way that is more capable of succesfully adapting to change in a timely fashion. The long-term fate of the Postal Service and hard copy correspondence in the Informa-tion Age is impossible to see clearly from today’s vantage point. Projecting future mail volumes is an inexact science at best, particularly in the modern context where technologies change rapidly. The Commission believes, however, that Internet use is likely to divert increasingly larger portions of the mail stream to the electronic format. The chart below illustrates the unprecedented near- and mid-term threat posed by technology to the Postal Service’s bottom line under one possible scenario:
These projections reflect independent analysis performed for the Commission. They incorporate the projected savings anticipated by the Postal Service’s own reforms already underway. This forecast also assumes that postage rates will continue to adjust with inflation, as they have for the past 30 years. Even with these revenue-positive factors, the 15-year outlook for the Postal Service remains grim and makes a powerful case for a far more ambitious overhaul of the nation’s postal system. The specific numbers cited above are, of course, speculative. But the trends they foresee are sobering and credible: The traditional mail stream will likely continue to migrate to cheaper Internet-based alternatives. Largely as a result, the Postal Service will increasingly find it difficult to meet its “break-even” mandate (i.e. charging just enough for postage and other services to cover expenses). And, even if postage rates continue to adjust for inflation, the Postal Service, over the next 15 years, is likely to run substantial deficits. Equally discouraging, these obligations would pile on top of the Postal Service’s $92 billion in current debt and other unfunded obligations. Without significant modernization, the Postal Service will have three choices: dramatically roll back service, seek a rate increase of unprecedented scale, or fall even further into debt, potentially requiring a significant taxpayer bailout. Clearly, the public interest is better served by a strategy that aims instead to root out the substan-tial inefficiencies and other unnecessary costs apparent throughout the institution today in order to produce a far more efficient and capable 21st century Postal Service. Toward this end, it is the Commission’s emphatic view that an incremental approach to Postal Service reform will yield too little too late given the enterprise’s bleak fiscal outlook, the depth of current debt and unfunded obligations, the downward trend in First-Class Mail volumes and the limited potential of its legacy postal network that was built for a bygone era. The American people deserve the most capable and efficient Postal Service that modern techniques and “best execution” strategies can make possible. With strong management and employee performance, sound partnerships and sophisticated technologies, the Commission is confident that the Postal Service can dramatically reduce its costs and stabilize its bottom line. The Commission also firmly believes that e-mail, despite its significant inroads, does not spell the end of the traditional mail system—at least on the horizon of our report. Thus, the biggest threat today is being too timid in the area of postal modernization and gambling with the future of affordable, universal mail service, in the process. Already, important progress has been made by Congress and by the Postal Service itself. This report aims to accelerate and elevate the pace and direction of these changes. In doing so, it is the Commission’s hope that these recommendations can ensure a strong future for universal postal service and, perhaps by doing so, encourage other Federal agencies to refocus on their core value, rethink how they do business, and reshape public service in the process. Forward • Executive
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