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Op-Ed: At long last, Postal Service aes
Reseller program
By Ross Marchand | Taxpayers Protection Alliance
The $200 million in annual revenue gains won’t make up for
multi-billion-dollar net losses, but reform has to start somewhere.
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 Too often, taxpayers have had to put up with costly
government programs that only expand over time. America’s mail carrier has more
than its fair share of red ink, and the agency’s mission creep and inefficient
operations certainly haven’t helped.
Due to dubious discounts supposedly passed along to bulk postage buyers, the
U.S. Postal Service (USPS) has had real trouble raising revenue to meet growing
expenses. For years, companies participating in the reseller program have used
these discounts to pad profits while undermining the USPS’ business model. This
program is fortunately coming to an end, giving taxpayers and consumers a rare
cause for celebration. Other agencies should take the USPS’ lead and give
much-needed scrutiny to floundering operations.
Like most sellers, the USPS is eager to extend promotions as a way of getting
new consumers and attracting large clients. Without the appropriate oversight,
strategic discounts can easily spring leaks in any venture. The USPS learned
this the hard way when it gave private resellers the green-light to offer
marked-down postage to bulk buyers. These middlemen strayed far from program
guidelines, extending discounts to companies that didn’t buy enough postage to
qualify for promotional rates.
In 2017, the Capitol Forum (a watchdog group) used barcode scanning technology
to decode the postage prices that middlemen were offering small postage buyers.
They found that these small buyers were offered bottom-of-the-barrel prices by
resellers even after the postal consumers emphasized how small their shipping
volumes are. In some cases, these buyers paid just $10.26 on a three-pound
parcel that should have cost $14.90. That $4.64 difference bolsters middlemens’
balance sheets because it ensures that customers will patronize them instead of
going directly to the post office. But every cent of that total comes at the
expense of postal profitability and subtracts from product cost coverage.
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For a while, this unsustainable arrangement operated free of scrutiny and cost
the agency more than $200 million per year. The first shoe thankfully dropped at
the beginning of 2019, when the USPS began divorcing itself from leading
reseller Stamps.com. The agency nixed an “exclusive partnership” with the
reseller, cutting off access to the lion’s share of deeply discounted postage.
Despite this step in the right direction, the reseller program continued to limp
along at substantial cost. The USPS Inspector General (IG) released a heavily
redacted report that analyzed, “[t]he complex role of middlemen and discounts in
the USPS
While most of the report is hidden behind a thick sludge of black ink, postal
management wasn’t pleased by the findings. The IG notes, “management claimed
that the OIG’s report contains commercially sensitive information and should
only be disclosed to postal management... Management also disagreed with many of
the OIG’s findings.” The IG regarded these clumsy attempts at secrecy as “an
attack on the independence of the OIG and an attempt to keep important work from
being disclosed to critical stakeholders.” Meanwhile, taxpayers and consumers
were left wondering why the USPS was so afraid of discussing its supposedly
innovative and money-making venture out in the open.
Then-incoming Postmaster General Louis DeJoy rightly saw this postal drama as a
major red flag and reportedly tried to immediately axe the program. There was
(predictably) pushback from postal management and progress proved slow. But it
looks like DeJoy finally got his way; the program is scheduled to be
unceremoniously kiboshed on Oct. 1. At last, taxpayers and consumers can place
some trust in beleaguered postal leadership. The $200 million in annual revenue
gains won’t make up for multi-billion-dollar net losses, but reform has to start
somewhere. Only time will tell if the USPS can fully get its act together and
deliver for the American people.
Ross Marchand is a senior fellow for the Taxpayers Protection
Alliance.
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