The Postmaster General has historically been a “do-nothing” job; a post where Presidents could indulge in a bit of nepotism by appointing loyal supporters or friends without much outside scrutiny. The job is relatively cushy by Washington standards—don’t rock the boat, and you’ll be guaranteed a long and happy tenure, at least until the next administration comes in.Unfortunately for Patrick Donahue, he may have bit off more than he could chew in today’s climate. With the agency teetering on the brink of total financial collapse, Donohue made a statement last week comparing his agency to the most infamous of economic basket cases—Greece. CNN Money reports:
The head of the U.S. Postal Service said Tuesday that if the service doesn’t cut costs and Congress fails to act, it’s going to be in the same dire straits as Greece…He said that Greece’s ratio of debt compared to gross domestic product is 1.61 and the U.S. Postal Service’s ratio of debt compared to revenue is 1.51.Donahoe clarified later that he was sincere in the comparison, except he didn’t think the U.S. Postal Service is on the verge of default or a bailout.“But, it’s true,” said Donahoe, speaking with reporters at a postal policy forum called Postal Vision 2020. “Unfortunately, if we don’t do something we will look like that.”
The Postal Service’s problems are legion. Staffing costs are far too high, and the agency is unlikely to remain solvent without significant cutbacks and massive office closures. Meanwhile, the USPS has suffered a steady decline in both mail volume and revenue. Email has largely replaced paper mail as the primary means of long distance correspondence, as efficient and cheap private parcel delivery services such as UPS, FedEx, and DHL have largely cut them out of the market.Yet while these problems are serious, they should not have been surprising. Technological change like this happens all the time. Western Union telegraphs and mail-order catalogs were replaced by the telephone and the internet. Nature leads its course, as the old makes way for the new—a system set up for the America of 1950 has little relevance to the needs of modern America.The US Postal Service is an yet another outdated remnant of the 20th century blue social model that needs to go the way of the steamboat, but because the institution is so deeply ingrained within the Federal bureaucracy, no one wants to see the truth. Postal workers unions blame health care costs and politicians point to the current economic situation as the reason that the Postal Service is in trouble.Donahue deserves some credit for pushing for more comprehensive changes to the system, but even his proposals are only temporary stopgaps. A reduction health to healthcare costs and cuts Saturday mail service cannot fix a poor business model, no matter how strong the economy.The changes the post office needs are much more fundamental. Plans have been floated to expand the office’s function beyond its core of mail delivery, perhaps towards a more internet-based approach to communication, or possibly towards a general interface between people and the government. It’s hard to say whether any of these ideas will be successful, but the USPS will need radical thinking along these lines if it hopes to stay solvent much longer.And one reform is essential if the service is to have any real chance of survival: the US Congress needs to stop micromanaging the Post Office. Crazy mandates by congressmen trying to curry favor with the folks back home or kiss the ring of powerful lobbies (unions and junk mail advertisers, for example) make an already difficult management job impossible. These habits grew up back in the era when the Post Office was the single most important source of political patronage in the federal government, and a dysfunctional relationship between congressional overseers and management is deeply rooted in the institutional culture.Right now we have a truly toxic recipe for meltdown and failure: a bloated organization challenged by fundamental changes in its business model combined with an archaic and unworkable management system which empowers self-interested, self-promoting grand standers on Capitol Hill. Given the growth of entitlement spending and the explosion of national debt, post office subsidies will come under increasing scrutiny.Change is on the way.