Mail Will Be Slower, More Expensive Under DeJoy Postal Service Plan
(Bloomberg) -- Postmaster General Louis DeJoy said his plan to slow First Class mail and hike rates will help the U.S. Postal Service avoid bigger financial deficits and eroding service in the future.
The 10-year plan announced Tuesday “creates a viable Postal Service that serves the market,” DeJoy said in an interview. “We’re recognizing the reality of the situation.”
Under the plan, the Postal Service would add a day or more to its standards for First Class mail delivery, increase rates and reduce post office hours to ward off as much as $160 billion in deficits over the next decade. The Postal Service is struggling to deal with sagging letter volume and dropping revenue. It says it has lost $87 billion over the past 14 years.
The plan faced quick criticism from congressional Democrats, including House Speaker Nancy Pelosi who said in an emailed statement it would result in “serious delays and degradation of service for millions.”
Current standards call for delivering First Class mail in one to three days. Under revised standards, delivery time would stretch to as much as five days, according to the Postal Service plan. It also said it would “align hours of operation” at low-traffic post offices.
The service said it will seek approval from the Postal Regulatory Commission to change the First Class service standards. DeJoy in the interview said he expects approval by late summer.
“We’re moving,” DeJoy said in the interview. “A lot of it’s within our control.”
Action wards off financial losses and eroding service, he said.
Changes include shifting mail from air to ground shipping, which is more reliable, the Postal Service said in a news release.
First-Class Mail traveling within a local area will continue to be delivered in one or two days, and 70% of First-Class Mail will still arrive in three days or less, the service said.
The plan calls for an additional $40 billion in revenue from increased prices for services including First Class mail. DeJoy said he couldn’t predict how much a First Class stamp will go up.
“We are committed to delivering affordable service to the American people,” DeJoy said.
The plan renews Postal Service calls for Congress to lift an obligation to pay in advance for retirees’ health care benefits. The requirement put in place in 2006 has left the Postal Service with $35 billion in unfunded liabilities on its books because it has not paid into the fund for a decade, according to a summary by the House Committee on Oversight and Reform.
The plan also asks Congress to require retirees to enroll in Medicare as their primary payer to relieve a burden on Postal Service funding. Such a mandate could save $10 billion a year, according to the House summary.
Mark Dimondstein, president of the American Postal Workers Union that represents more than 200,000 workers, expressed “deep concerns” about parts of the plan. In an emailed statement he cited proposals to slow the mail, reduce access to post offices and “further pursue the failed strategy of plant consolidation.”
Dimondstein cited “positive attributes” such as plans to hire 11,000 workers at sorting facilities, and to invest $4 billion for initiatives including improving lobbies of local post offices and adding shipping consultants for small businesses.
Mail delivery has remained sluggish since slowing down last year after DeJoy cut overtime and extra trips by delivery trucks in an effort to rein in costs. DeJoy, a donor to former President Donald Trump, was appointed by a Republican-majority board last year.
Some congressional Democrats have called for DeJoy’s ouster. But he said, “I want this job. I’m excited about it. I like this plan.”
“I’m moving forward,” he said.
Several lawmakers criticized the plan.
“Postmaster General DeJoy has put forth a draconian plan that guarantees the death spiral of the United States Postal Service,” representative Gerry Connolly, a Virginia Democrat who is chairman of a subcommittee overseeing the Postal Service, said in an emailed statement.
“Customers and Congress are fed up with DeJoy’s service cuts and record delays,” Connolly said. “The only way to right this ship is new leadership, a better vision, and a realistic plan that serves all Americans.”
Parts of the plan “will harm service for folks across the country,” said Senator Gary Peters, the Michigan Democrat who is chairman of the Homeland Security and Governmental Affairs Committee that oversees the Postal Service.
Ron Bloom, chairman of the postal board, in an interview said the Postal Service looks forward to discussion with Congress. Delivery standards will affect little mail, and service-hour cuts at post offices will be infinitesimal, he said.
“This is a large, complex document,” Bloom said “We are absolutely convinced that people will come to appreciate this plan.”
DeJoy’s employment is decided by the independent agency’s board. President Joe Biden has nominated three new board members who would break Republican control of the body.
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