31 March 2012

A different view of the U.S. Postal Service

I don't know whether all these details are true, or to what extent they are relevant, but I thought the comments are interesting and worthy of consideration:
These gloomsayers claim the national mail agency is bogged down with too many overpaid workers and costly brick-and-mortar facilities, so it can't keep up with the instant messaging of Internet services and such nimble corporate competitors as FedEx. Thus, say these contrivers of their own conventional wisdom, the Postal Service is unprofitable and is costing taxpayers billions of dollars a year in losses. Wrong.

Since 1971, the postal service has not taken a dime from taxpayers. All of its operations — including the remarkable convenience of 32,000 local post offices — are paid for by peddling stamps and other products.

The privatizers squawk that USPS has gone some $13 billion in the hole during the past four years — a private corporation would go broke with that record! (Actually, private corporations tend to go to Washington rather than go broke, getting taxpayer bailouts to cover their losses.) The Postal Service is NOT broke. Indeed, in those four years of loudly deplored "losses," the service actually produced a $700 million operational profit (despite the worst economy since the Great Depression).

What's going on here? Right-wing sabotage of USPS financing, that's what.

In 2006, the Bush White House and Congress whacked the post office with the Postal Accountability and Enhancement Act — an incredible piece of ugliness requiring the agency to PRE-PAY the health care benefits not only of current employees, but also of all employees who'll retire during the next 75 years. Yes, that includes employees who're not yet born!

No other agency and no corporation has to do this. Worse, this ridiculous law demands that USPS fully fund this seven-decade burden by 2016. Imagine the shrieks of outrage if Congress tried to slap FedEx or other private firms with such an onerous requirement.
It's clearly a rant, posted at a liberal/progressive source (Common Dreams).  The implication is that politicians want the USPS to "fail" so that the services can be privatized and the resultant profits can be pocketed by the eventual owners.

Open for discussion.


  1. It's the exact same plan as One Child Left Behind.

    A few years back there were a couple of Canadian conservatives who were actually caught on tape discussing the fact that they wanted to destroy the public education system from within so that it would be easier to pitch the "we need to fix public education by privatizing it" line to the public.

    P.J. O'Rourke actually has a great line about it, "Republicans are the party that says government doesn't work, and then they get elected and prove it."

  2. I've not looked into their finances personally, but I know I've heard about this before. It would be a terrible loss to do away with the Postal Service. They provide the infrastructure that allows the for-profit companies to exist. Who else would get to decide what is the address of a location? And does anyone think a private company would go to any trouble to deliver a marginally legible envelope? Would it pay its employees well enough that they'd even stick around long enough to be familiar with their routes? Would private companies bother to serve poor neighborhoods?

  3. I happen to be a little bit to the right of Genghis Khan. I am also a small business owner and an investor (thanks to a large bank mortgage) in a small building that contains twenty office suites and twelve ma and pa stores.

    We had had a route postman who delivered mail to each entity, and had done so for four years. He "knew" every tenant and in some offices multiple addressees. We "knew" him. If a tenant was going on vacation and had failed to stop delivery, he knew at what office packages and mail could be dropped off. We "knew" him -- a big Irishman who told us when he was going on vacation himself. and we would have to put up with a substitute carrier. One day he informed me that he had "lost the route" to a more senior postman. The routes had been shifter slightly and had been bid out. The most senior bidder acquired us. He had put in a bid himself. The bidder took over in last September. He was retiring in June of this year. He had accrued so many "unused sick days" and vacation days, that he only works intermittently and substitutes have to fill in at least three days on each delivery week. It is nobody's fault, that nobody knows anybody and the mail appears at off times of day. It is just the bloody system

    There is room for USPS but it has to adjust its business model at well. First class mail, with the permission of the sender should be transmitted from sender's post offiuce by super high speed computer fax from originating to ending P.O. automatically put in envelopes and then hand delivered by the postman to your mailbox in hard copy. There is a market for that. During world war 2 soldier V-Mail was photographed and sent that way to the United States. Now we have computers and we can do it High speed rail when developed should be used as well, with sorting on the train between end points. Make hard copy more valuable.

    Let's look ahead and put the USPS in the 21st Century.

    1. The system you describe is e-mail, readily accessible to anyone with a computer (middle class and above), a library (thrifty poor) or a smartphone (profligate poor.) I use postal mail only for things that need a hard copy, like bank documents, or physical objects.

    2. > There is room for USPS but it has to adjust its business model at well.

      If you read the USPS 2012 plan you'll note they've been asking Congress for substantially more room to adjust their business model, but not getting what they've asked for. They want room and flexibility to get into new markets with new services. I'm not advocating, just saying.

  4. Personally, I have had more problems with FedEx and UPS than the US Postal Service -- and they cost me more to use!

    Anti-"Big Government" types are always saying that corporations can do a better job for less money. I have yet to see an instance where, in the long run, this turned out to be true: In the end, corporations wind up charging more for the same (or poorer) service and, of course, paying their CEO's big fat bonuses for the "splendid" job they are doing.

  5. Jerry Seinfeld had a good joke years ago that really made me think differently about the USPS. It went something like this (price of a stamp updated): "Imagine someone giving you a letter and telling you to take it to their brother's house in Alaska. Then they add: Well how about if I give you 50 cents?"

    The whole republican privatization push is just all about who gets the money. Republicans argue that public services are wasteful. Well, they may be. But 'waste' doesn't disappear into another dimension. The 'wasted' money actually goes somewhere -- usually into the pockets of workers. Privatized versions may be less 'wasteful', but they are also by necessity profitable. This profit doesn't come from nowhere. So there is still 'overhead', but instead of being 'waste/inefficiency' that goes to workers, it is 'profit' that goes to owners.

    Who deserves the money more? I don't know. All I know is that either way it's guys like me that pay.


  6. I find the thesis entirely convincing. However, I haven't heard the other side. I would love to see a debate on the issue. Does anybody know of at least one good source for the opposing argument?

  7. Don't forget about the public-sector unions. If there's one thing the Repugs hate, it's workers having the temerity to want to control their own destiny. Gut the public sector and you also gut those pesky unions that oppose the right's war on anything standing in the way of corporate profits.

  8. Yeah I've been harping on this for months. I do buy the "conspiracy theory", that conservatives (including the one at the head of USPS) want to take down and milk what is one of the last giant union employers in Amercia. And that the 2006 law is largely to blame.

    Sure, with the internet, the Post Office probably needs to adapt to survive, but it is only "broke" because all its money is being taken to fund retirement for employees not born yet, a weird thing nobody else does ever because it bankrupts the company.

    Bernie Sanders is on this, but nobody else seems to be. MSNBC's Up w/Chris Hayes did a great episode on it a little while ago. Good discussion, covers the issues thoroughly.

  9. Only took 3m to get actual numbers, folks.

    The USPS of course posts financial statements each Q and each year. Its 2012 plan says, in part, that it figures to lose $3B on operations (not counting any pre-funding requirements). It also shows that the USPS is trying desperately to reduce costs (labour cost declines from reductions in overall labour hours - which can only mean attrition or layoffs - have been made at a remarkable rate over the past several years); that the USPS really truly is expected to prefund pension obligations, to the tune of $11B (really!) in 2012 alone (though $5B is from 2011 that they simply didn't have cash to fund); that they have essentially *no* operating cash left due to the onerous pre-funding obligations.

    They have been profitable and self-funding from 1971 to 2007, but they began running significant operating losses in 2008. Revenues have declined some, operating costs have climbed significantly, and Congress' decision to have them prefund the pension fund - can anyone name a corporation that is doing this? - is pretty much burying them. For more detail, this is a good analysis of the issues from someone who is not clearly biased: http://www.postalmuseum.si.edu/industrywhitepapers/R41024_20100119.pdf

    So as is the case with too many things we read on the Internet, the original post had inaccuracies and half truths, outrageous and incredible truths (an unrepentant Congress trying to force the USPS to produce cash it doesn't have because it suits political purposes), and holes worth filling to provide a complete picture of a service that millions of Americans still value and rely on.


    1. If memory serves, private companies have to either prefund their pension plans (including retirement pay and health care plans) for their cmployees -- or declare that as liabilities on their balance sheet. The decision about either to pre-pay or declare liabilities is usually determined by how the debt costs the company -- if debt is cheap (as it is today), they declare the liability.

      Fundamentally, the USPS is in the same boat as were all the US car manufacturers. Pension and health care costs had risen beyond what current operations could pay. In a private company you have the options of either taking an increasing liability (not good...) or the option of spinning out the pension plan -- essentially freezing the benefits. You fund the benefits with a package of money enough that annuities bought from an insurance firm will cover future payouts, based upon standard insurance tables. New pension & benefits liabilities are then covered by current operations, but usually at a lower benefit rate. (That's what GM and Ford have done, working with the UAW).

      The USPS can't do this -- as a Federal corporation, they have to accept whatever the Congress negotiates for their pension & benefits liability. And at the moment, with decreasing revenues and an increasing benefits & pension payout liability, they need to do something to cover it. They can increase the cost of postal coverage (eg, increase the cost of stamps), or reduce costs (shut postoffices, or reduce their hours, or reduce delivery) -- or go to Congress as ask for more funds to cover their annual operations.

      They *could* increase their revenues by increasing services, but they are a high cost operation compared to the private sector (look at the UPS costs to deliver a letter or package, compared to the USPS). Part of that is the UPS and the FedEx and etc can pick what services they can offer, whereas the USPS can't -- but they are a high cost service.

    2. Another problem is that although the USPS is privately funded, it still has to have its budget approved by Congress. This is a totally insane setup. Imagine owning your own business that you fund entirely yourself, but still having to ask some giant beaurocracy for permission every time you want to raise your prices or hire some new employees.

  10. No way to tell in advance if the system would wind up smooth ticking like the German, or broken like the Netherlands': http://www.marketplace.org/topics/world/deutsche-post-privatizing-was-smart-move and http://www.guardian.co.uk/uk/2011/apr/29/mail-privatisation-second-class-delivery respectively.

    I think the issue here is whether mail service is a civil right that we should all be required to have whether we personally want to pay for it or not (like roads, police, schools, and some say medicine or broadband) or whether the market can better handle it (like food, housing, and plumbing.) Personally I go with civil-right, which incidentally isn't expected to turn a profit.

  11. The primary purpose of private business is to make profit.
    The purpose of government is to serve the people.

    Not everything should be privatized.


  12. The first Postmaster General was appointed in 1775, before there was even a United States. If it worked just fine for over 200 years, why shouldn't it be working just fine now? Why don't Republicans ever think about that? It seems that everything that wrong with America today has its roots in Republican Party shenanigans.

  13. The last form of communication that can't be tracked/monitored/archived and used against you later.
    Hey just because I'm paranoid doesn't mean... you know the drill.


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