Case Overview, Postal Service Modernization / Reform

This document provides background information and summarizes the debate over postal service reform. The links to the left will lead you to public documents that we have found.


          The U.S. Postal Service has a long and glorious history, reliably delivering the mail to all Americans in every nook and cranny of the United States. Through "rain, sleet and snow" the mail does, in fact, arrive at our homes and offices six days a week. Moreover, it's inexpensive to use the U.S. Mail and the Postal Service will transport and deliver a wide range of instruments: packages, fliers, magazines, and just about anything that can be fit into an envelope or small box.
           At the same time the Postal Service faces a serious challenge as it faces the future. Today, an individual wanting to move information, data, a letter, or a package has other options aside from the U.S. Mail. Most obviously many kinds of letters that would previously be sent through the traditional mail can now be sent electronically-and at no charge beyond a standard monthly fee for an Internet hook-up. Commercial enterprises like UPS and FedEx, can ship smaller items that the Post Office does as well, but can also ship much larger packages and thus is more convenient for many businesses who would prefer to use one a single vendor for all their packages.
           Many argue that the U.S. Postal Service is in a deteriorating position that threatens its quality of service and financial stability. As a congressional aide noted, "First class mail volume is going down and at the same time you have the Postal Service raising rates beyond the rate of inflation. That kind of behavior leads to a death spiral." Legislation to reform and modernize the Postal Service was seriously considered in the 106th Congress by the Postal Subcommittee of the House Government Reform and Oversight Committee. The legislation developed by Subcommittee Chair John McHugh (R-NY) and other members was designed to make the Postal Service more competitive. The legislation would have allowed the agency to expand into other lines of business beyond their traditional role of transporting letters and small packages. Said one supporter, "We need to give the Postal Service the tools to adapt and compete and deal with problems. FedEx, the Internet, and so on didn't exist 30 years ago when the last effort was made to revamp the Postal Service." The legislation would have also given the Postal Service more flexibility in pricing.
           The legislation was fought by UPS (United Parcel Service) and some companies (like newspapers) with a stake in preserving the status quo. UPS argued that it was unfair to let the government compete in other markets because the government would have an unfair advantage. Republicans in Congress were not united in backing the legislation as some wanted to privatize the postal service instead of trying to reform it. The American Postal Workers Union was also opposed. The Democrats on McHugh's subcommittee didn't support the bill either. The legislation couldn't overcome this opposition and H.R. 22, the Postal Modernization Act, never got out of the subcommittee.