PRIVATIZATION OF THE UNITED STATES POSTAL SERVICE -- HON. PHILIP M. CRANE (Extensions of Remarks - July 22, 1999)

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HON. PHILIP M. CRANE OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES THURSDAY, JULY 22, 1999

Mr. CRANE. Mr. Speaker, remember that old excuse ``the check is in the mail''? In the
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``old days,'' this excuse could be used more easily than today, when the myriad of electronic options makes sending a check a nearly instantaneous procedure. In fact, they are not even called ``checks'' anymore, but are called electronic financial transfers. With the telecommunications, computer and information technology revolution, there are a variety of options to get a document or payment from one place to another. As we use these advancements more and more in everyday life, the U.S. Postal Service (USPS) is losing steam, and its revenues are being greatly affected. Some even wonder if the Postal Service will become to the 21st Century what the horse-drawn carriage was to the 20th Century.

The federal government itself is taking advantage of these developments and using electronic means to do much of its business. For example, this year, millions of Americans paid their taxes and received refunds through electronic financial transfers. Many Social Security beneficiaries also receive their payments in the same manner--an electronic deposit into their bank accounts, thereby eliminating the role of the Postal Service. And, the federal government is saving taxpayer dollars by operating in this way. It costs approximately 43 cents to send a payment by check versus 2 cents to send funds electronically. Thus, fundamental change is necessary to enable the USPS to adapt and compete in this rapidly changing world.

The USPS has conceded that they do not operate in a legislative framework that allows them to be responsive in adapting to these changes in technology and to competition with these new services. In a 1995 speech, former Postmaster General Marvin Runyon said that USPS is losing a lot of its financial and business mail due to such technological changes, which has created competition from e-mail, electronic financial transfers, fax machines, and the Internet.

Mr. Speaker, as you will agree, the vast majority of USPS employees are hard-working people who want to deliver their product in the fastest, most efficient way possible. For the most part, the problem is not with the employees of USPS--it is with the legislative mechanism that limits their ability to do their job effectively. First, the Postal Service has an absolute monopoly over first-class mail--there is no competition and thus no motivation to improve service. Also, the federal government subsidizes USPS. Thus, it has no real motivation to improve service. Also, the federal government subsidizes USPS. Thus, it has no real motiviation to be in the black at the end of the year because it can borrow from the Federal Treasury when necessary. The Postal Service does not have to pay taxes, and therefore has no real incentive to improve its efficiency. In total, USPS has no motivation to become more productive and efficient because it will continue to operate due to its subsidy and a lack of competition.

For these reasons, I am reintroducing legislation to convert USPS into a totally private corporation, owned by its employees. This legislation calls for this transition to be implemented over a five-year period, after which the current monopoly over first-class mail would end. To make sure USPS has a fair chance at succeeding as a private corporation, my legislation allows for the cost-free transfer of assets currently held by USPS to the private corporation. Consequently, USPS would have an enormous infrastructure to start with that they are already familiar with, and the ability to create new products and services to make it competitive with other corporations providing services it can only dream of challenging today. To increase the motivation of employees to work hard and make USPS competitive, the employees would own the corporation, making their earnings contingent on the amount of work they put in.

In past Congresses when I have introduced this legislation, I have been opposed by those who believe that privatization would result in the Postal Service being chased out of all metropolitan markets, leaving it with troublesome rural areas to service. With changes in technology occurring everyday, the USPS is more likely to be left with rural and bulk mail if it remains in its current government-subsidized form, than if it privatizes and has plenty of options to respond to the technology revolution.

For these reasons, I hope the employees of USPS will carefully consider this proposal and recognize its merits, as they stand the most to gain with privatization. I continue to hope that my colleagues in the House of Representatives might join me in this effort to privatize the USPS so that it will be a responsive, efficient service for all Americans to use in the years to come.
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