Retiring Postmaster General Urges Congress to Forgo 'Absurd Mandate' and 'Shortsightedness'

Postmaster General Patrick Donahoe, retiring this month, used a Tuesday Newsmaker to urge Congress, postal unions and the mailing industry to grant the Postal Service flexibility to adjust to changes.

He started his list of recommendations with retiree health benefits, which he called "my favorite example of an absurd mandate" because Congress requires the Postal Service to prepay a 40-year obligation in 10 years. This could have been done if the Internet had not been invented, he said.

"To compound the issue, we massively overpay for retiree health insurance," because the postal plans don't leverage Medicare, he said.

The Postal Service is being held back by Congressional myopia and shortsightedness, he said.

Donahoe hoped all stakeholders would be willing to take a longer view. The mailing industry objects to product and pricing flexibility and unions see the future through the prism of preserving jobs and benefits, he said.

Donahoe asked Congress to acknowledge change: First-class mail volumes have declined by 35 percent in the past 10 years while package deliveries have increased 50 percent in the last five years, driven by e-commerce.

The Postal Service has made adjustments, resulting in a profit of $1.4 billion in the last fiscal year, before counting the healthcare mandate. He described changes that include new services and cost cutting.

"We're delivering groceries in San Francisco; we're doing same-day deliveries in New York; we're delivering on Sunday in many markets; we're doing some small scale warehousing services," he said. The warehousing means that a customer can order something and have it delivered the same or next day, he said.

Donahoe identified delivery as the core business of the Postal Service, in response to a question of why deliver groceries but not enter banking. A successful business needs to stay with it's core but not limit itself to what it's doing now, he said.

The Postal Service has 32,000 locations, so "I think the key thing to keep in mind is that we are everywhere every day," he said.

Donahoe cited adjustments the Postal Service has made in response to market and technology changes: consolidating mail processing centers, changing window hours in Post Offices, eliminating 23,000 delivery routes and reducing its workforce by 212,000 positions without layoffs.

These will result in slightly longer delivery times for single piece, stamped first class mail, perhaps 4 percent of mail, he said. Metered mail, standard mail mainly used for advertising, and medicines will not be affected, he emphasized