MORGANTOWN, W.Va. – The idea of privatizing the U.S. Postal Service (USPS) is one that has been floating around for many years, and more recently by President Donald Trump.
A primary reason for this is because USPS is unprofitable, however, one WVU law expert said it is not their fault, but instead a wound inflicted by the government.
Matthew Titolo, a professor of law at the WVU College of Law, said a law was passed in 2006 that required USPS to be able to fund itself for 75 years in advance and that began the downfall of the mail carrier.
Imagine if your credit card company demanded that you pay $1 million into an account to cover all future costs you might have. Titolo said. Most agencies and businesses operate on a pay as you go model, so they fund current operations out of current revenues and are not required to basically plan 50-75 years out into the future. There are a lot of onerous assumptions and obligations that have been placed in the post office that has hobbled it really. Without these obligations, it would be operating at close to break even and even in the black, so that seems to be a lot of what’s happening, this seems to be a manufactured crisis.Matthew Titolo – WVU College of Law Professor
Titolo said there is some legislation in Congress right now to repeal the prefunding mandate.
Despite the fact that the idea of privatizing USPS is circulating, Titolo said, there seems to be little to no public or political support. He said USPS has had longstanding popularity with the American public. Anything is possible, including privatization happening in six months, but Titolo said it seems very unlikely that there will be enough political support in Congress to pass massive legislation privatizing the post office.
Titolo said there are many concerns posed to the public if USPS is privatized, namely routes disappearing. Rural consumers, he said, would be hit especially hard because as a private company, USPS would be obligated to increase fares and not charge the flat rate fee they currently do.
“If it were privatized, unprofitable parts of the business such as rural delivery — the rates would have to go up, it’s really that simple,” Titolo said. “If you use the flat-rate model, use a sliding scale — so if I’m dropping a letter to Pittsburgh, it’s one price, but if I’m sending it to Alaska, it’s five times the price. That’s what you would see, you’d surely see some discontinuance of ‘unprofitable routes’ and a drop off in services in places that are far off from urban centers.”
Right now, he said, USPS has an obligation to deliver mail to all parts of the U.S. because it is a public service, however, a private company would have no such mandate.
Another reason privatizing USPS is not a good idea, Titolo said, is because they are vital for last-mile deliveries.
That is to say, USPS is often the one dropping off mail at a customer’s door and going from home to home all across the country. Even retail giant Amazon relies on USPS for last-mile deliveries, Titolo said, because it is expensive and not easy to do on a daily basis.
“It’s a public good, it’s something for all of us, it’s something for all Americans and it’s not intended to be treated as a private good or a private business,” Titolo said. “I think that’s important for people to understand.”
Titolo said another important thing for people to remember is that the financial woes USPS is having was inflicted by the 2006 law and a reversal of that law would help to make USPS profitable again.
“If you do that and make a couple of small changes such as allowing the post office to — instead of investing all of its funds in low-yield government bonds, kind of allowing it to diversify as other agencies and other companies do and allow it to buy from different, higher-yield investments, these things are easy to fix, that’s the bottom line,” Titolo said. “There is no crisis at the post office where we need an emergency privatization fix, it’s something that is pretty routine and would be able to fix with a small adjustment.”