- [Narrator] The post office is in trouble.
It's lost money for 13 years straight.
Putting it in what experts say
is a dire financial situation.
That's bad news for a service
that delivers everything from medication
to Social Security checks.
If you wanna know the reason for this,
just take a look at a first class postage stamp.
It guarantees mail delivery anywhere in the United States.
Even to the bottom of the Grand Canyon.
And to cover the cost of the trip,
the post office charges a flat rate of 55 cents.
These two things,
mail that's universal and affordable makeup the mission
of the post office.
But over the years,
these goals have come into conflict,
creating a financial situation
that has raised questions about
what the USPS should do,
and how far mail should be expected to go.
The modern postal service we know today,
emerged in 1970.
That year, 152,000 postal workers walked off the job
to protest pay and working conditions,
halting much of the nation's mail.
President Nixon declared a national emergency
and called in federal troops to sort the backlog.
- I have just now directed the activation of the men
of the various military organizations,
to begin in New York City,
the restoration of essential mail services.
- [Narrator] Part of the reason for the postal crisis
was that Congress held the purse strings.
At the time,
the post office was a cabinet level agency,
and almost 25% of postal revenue came
through congressional appropriations.
And, all important decisions from wages
to setting postage rates were made by Congress.
This led to artificially low postage rates
which were popular,
but also created a stagnant postal infrastructure.
David Trimble of the government accountability office said
oversight for the post office was similar
to other government agencies.
- The post office is actually part
of the federal government.
It was a department.
And as a department,
Congress played a much more active role in a lot
of operational decisions.
- [Narrator] Kevin Kosar from the right-leaning
American Enterprise Institute,
said it made running a nationwide logistical system,
difficult.
- You had all these conflicting demands
that flowed through the public,
through their representatives,
and into the post office department.
- [Narrator] To deal with these issues,
Congress decided to let the government agency run itself
more like a business.
In 1970, it passed the Postal Reorganization Act,
which gave the agency more independence in managing
its operations.
But independence came with a catch.
The post office had to pay for everything itself.
From operations to employee benefits.
- The Congress doesn't pay for any
of its regular operations,
nor does it have any say over postage rates.
- You sort of have this organization that's created,
that's got sort of competing pressures on it,
having a sort of a public role
or public service mission of serving every community,
while at the same time operating in a businesslike fashion
so that their operations financed all of their costs.
- [Narrator] The USPS benefits from not having
any competition in delivering mail
to American mailboxes.
By law, it operates a monopoly over
what has come to be known as market-dominant products.
- The letterbox in front of your home
or in the lobby of your apartment building,
nobody else is allowed to get into that,
other than the Postal Service.
- [Narrator] This covers categories like first class mail,
marketing mail and periodicals,
which make up the majority of its revenues.
Other services like package delivery are open
to competition from companies like FedEx and UPS.
This new postal business model works
because mail volumes kept increasing
through the 20th century.
The Postal Service benefits from having economies of scale.
The more mail it processes,
the less it costs to deliver each letter.
This is crucial for a business infrastructure
that is expected to deliver mail across the United States.
The USPS has built out this infrastructure
to fulfill its universal service obligation,
or USO.
This is a collection of laws,
practices and expectations
for how the post office should serve every American.
The specifics of the USO are vague,
but generally it has come
to mean-affordable,
six-day-a-week mail delivery,
regardless of distance or mail volume.
Over the years,
the post office has tackled mail delivery
in a variety of ways,
using pneumatic tubes,
sleds, and Segways.
Even today, there are postal routes
where mail is delivered entirely by boat.
- Postal Service is often trying
to do a lot of different things at the same time,
which is tough.
- [Narrator] And it started getting tougher
in the 21st century.
The internet offered a much quicker way to communicate.
And, in 2001,
mail volumes began to decline.
These declines prompted Congress to pass another set
of consequential reforms in 2006.
The Postal Enhancement and Accountability Act was intended
to streamline the rate setting process
by allowing price flexibility
on competitive products like packages,
while at the same time putting a price cap
on first class mail
that was tied to inflation.
It was meant to help the post office,
but it did the opposite.
- A short time after was enacted,
about 12 months,
United States slid into a recession.
Mail volumes and revenue started to plunge,
and the Postal Service struggled to find the money
to put in the retiree health benefits fund.
- [Narrator] The retiree health benefits fund
was another requirement in the law
that mandated the Postal Service pre-fund health benefits
to the tune of over $5 billion per year.
While the post office was expected
to maintain universal service
to approximately 1 million new addresses per year.
A tall order when postage rates couldn't be raised
beyond the inflation cap.
And, while package volumes were growing,
they weren't enough to cover the losses
from first class mail.
The agency began defaulting on its health care payments
in 2012,
causing debts and unfunded liabilities
to balloon to more than double annual revenues.
For over a decade,
the Government Accountability Office has classified
the Postal Service's financial situation as high risk,
and in need of congressional action.
- At stake, is the future of what has been,
since this nation's founding;
the right of every American to send and receive mail.
- The fact is without some important changes to the law
that shape our business model,
we cannot survive as a self financing entity.
- Without legislative and regulatory reform,
our net losses will continue to grow.
- I hope we can agree that the financial state
of the Postal Service is unacceptable
and needs to be fixed.
- [Narrator] Several reform bills have been introduced
in Congress to address the burden
of pre-funding health care.
And some, also include proposals
that would limit the scope
of the universal service obligation.
- Do we need six-day-a-week delivery?
Should there be delivery to every location in the country?
Should you have...
Is it right to have a single rate,
whether you're mailing a letter across the street
or to Alaska
or to Hawaii?
These are sort of elements of service
that we've expected as a community or society
for the post office to provide.
But if you're requiring them to live
with these constraints,
then the question is how do we fairly pay
and cover those costs?
- [Narrator] But legislation that changes the USO
has been difficult to pass in part,
because the post office remains so popular
with Americans.
An expert say any operational changes run the risk
of inevitably affecting service for some stakeholders.
- Postal policy is very difficult to get enacted.
And the reason is that the major stakeholders
all want things,
and these things,
often, are in tension with one another.
- [Narrator] But experts say if Americans want
the post office to survive,
they may need to decide
how frequently they need mail delivery.
And, if a 55 cent stamp is enough
to take their letters to the distance,
however far that might be.
(gentle music)