Trump task force proposes major Postal Service overhaul

Stamp mistake costs Postal Service millions

A task force created by President Donald Trump is proposing a broad overhaul of the U.S. Postal Service, including cutting costs, relying on private partners and charging more for "nonessential services," in a report released Tuesday.

The report recommends that the Postal Service develop a new pricing model that would remove current price caps and charge market-based prices for mail and packages that were not deemed to be "essential postal services." That recommendation could raise costs for Amazon and other major businesses that are currently using the Postal Service to supplement their delivery operations.

"Path to sustainability"

The report also warns that the Postal Service is "unsustainable and must be fundamentally changed if the USPS is to avoid a financial collapse and a taxpayer-funded bailout."

Treasury Secretary Steven Mnuchin said the report "contains achievable recommendations" that would "fulfill the president's goal of placing the USPS on a path to sustainability."

Mr. Trump directed a review of the Postal Service's finances in April, after repeatedly accusing the mail carrier of subsidizing Amazon and losing money on its package delivery services. "Only fools, or worse, are saying that our money losing Post Office makes money with Amazon," Mr. Trump tweeted in April.

Most economists disagree with that assessment. The report notes that "packages have not been priced with profitability in mind," but it didn't find that the USPS loses money on Amazon.

"To me this reads a little bit like they had an agenda in mind when they wrote the report, to show there was unfair competition in the package-delivery segment," said Robert Atkinson, president of the Information Technology and Innovation Foundation. The ITIF has previously suggested other reforms to the Postal Service, but it agrees with other economists who find that its package-delivery service already charges market-based rates.

What's "essential" and what's not

Officials who briefed reporters said person-to-person mail and person-to-person packages would be considered essential postal services and would be exempt from the higher rates that would be levied on nonessential mail.

Another recommendation would be to clearly define the Postal Service's "Universal Service Obligations," which would spell out the types of mail and packages for which a strong rationale existed for government support of deliveries.

The report said between 2007 and 2018, the Postal Service had experienced net losses totaling $69 billion, and it's expected to lose tens of billions of dollars over the next decade. "The USPS's business model -- including its governance, product pricing, cost allocation and labor practices -- must be updated in light of its current operating realities," the report said.

Retirement obligations

Last month, the USPS reported a financial loss for the 12th straight year, citing declines in mail volume and the costs of its pension and health care obligations. Postmaster General Megan Brennan said Congress needed to give the it more flexibility to increase prices so it can return to profitability, saying: "The flawed business model imposed by law continues to be the root cause of our financial instability."

The Treasury report, however, rejects or ignores reforms often suggested by the service's advocates, such as removing the requirement that the USPS prefund health benefits for its retirees for 75 years. Congress imposed that requirement, which no other government agency has to meet, in 2006.

Online retailers Amazon and eBay participated in the report, according to the task force. Both companies didn't immediately respond to a request for comment from the Associated Press.

-- CBS News' Irina Ivanova contributed reporting