walter russell mead peter berger lilia shevtsova adam garfinkle andrew a. michta
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USPS Takes Another Slide

The New York Times reports that the U.S. Postal Service is now expecting to default on a $5.5 billion payment into the fund for health benefits for future retirees when the bill comes due next month. Although this will not impede operations in the short term, it is a clear warning sign that the agency cannot continue to function as is for much longer.

And, to the surprise of nobody who’s been paying attention, it looks like no help will be coming from Congress. It has been months since the Senate passed a bill to begin restructuring the postal service, but the House has neglected to pick up the bill due to opposition from both parties. It now looks likely that no bill will be passed before Congress goes into recess early next month. The USPS will  likely miss future payments as revenue continues to decline.

Obviously, the USPS needs major restructuring, and as we have noted before, even the Senate bill is no panacea for the organization’s many problems. The USPS could probably survive and even thrive on its own if allowed to go private; on the other hand it could continue to operate as a public utility if Congress were willing to kick in enough money.

What Congress wants to do is split the difference: interfere and micromanage with the USPS so that no management team could make the system work, while keeping it on a short budgetary leash. It’s not surprising that Congress doesn’t want to let go; the Postal Service is the oldest pork barrel project the federal government still runs. In the 18th and 19th centuries, the Post Office was the federal patronage office and political careers rose and fell based on fights to control postmaster nominations in various cities and towns. The Postmaster General was a more powerful federal official than just about anyone else; for most Americans, their local postal clerks might be the only federal officials they ever met.

In the old days, the postal service’s monopoly on mail delivery generated enough revenue to pay for the patronage and the waste. Now, with email and text messages replacing first class mail and powerful, greedy junk mail lobbies determined to keep junk mail cheap for advertisers, there isn’t enough money anymore.

Congress’ pathetic inability to manage the Postal Service won’t sink the republic, but the ineptitude and selfishness on display in the process just might. If Congress approaches the “fiscal cliff” it has set up for the end of this year with no more statesmanship and wisdom than it has exhibited in the USPS matter, the United States will be headed for the biggest man-made financial disaster in its history.

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  • An

    USPS labor cost is approximately 80% of revenue. Fedex and UPS are at or below 50%. In a normal business the executives would have cut costs to be competitive. Much of USPS labor inflexibility is due to congressional mandates coupled with the labor unions. I wonder what will happen when they begin peering off the cliff. We are getting to that point.

  • http://wwrtc.blogspot.com Art Deco

    It is hard to think of the United States Congress without regurgitating. Only the Bhutto-Zardari clan in Pakistan and the Greek national legislature are more prominent and thorough refutations of the value of electoral insitutions.

  • Richard Treitel

    So retired mail carriers will end up on Medicare like everyone else. I can’t see that as a tragedy.

    People who live in remote locations already pay more for most of the things they buy; charging closer to an economic price for their mail no longer seems like to me like exploitation.

  • Tom Gates

    Pardon me, but to remake an institution that is so complex, that has evolved and been integrated into the American culture and soul for over 200 years with the whiff of a magic wand is beneath the usual common sense that you exhibhit.

    Two points from many: A large portion of the USPS in management and worker ranks are made up of black workers, whatever the reason. With black unemployment and middle class jobs at desperate levels you want to just shove that aside with a quick reorganization? Right. Second, rural post offices are the cornerstones and foundations of most of flyover country. You want to sweep them aside in one fell swoop. Right.
    Michael Crichton’s gift to society through his books was to remind us that there are no simple answers to complex problems. Problems do not get fixed in thei country until they are broken. That is nothing new.

  • Andrew Allison

    @4 With the very greatest respect, I must disagree. It is precisely because the USPS is a 200 year-old institution that it must be remade. It’s mission has changed radically, but its management and procedures haven’t. The result is that it’s bleeding red ink. The simple fact is that at least half the employees are redundant, and keeping them on the payroll at taxpayer expense until they retire is not a viable solution. Nobody in this day and age needs daily delivery of regular mail; switching to every other day would free up half the carriers and their overhead, and having junk mail pay it’s costs instead of being subsidized by regular mail would either help the financial situation or put the thing out of its misery. Talk to all the private sector workers whose jobs have vanished over the years before arguing that postal employees should be immune from the reality.

  • Jacksonian Libertarian

    The Post Office Monopoly should be broken up and sold off just like the AT&T Phone monopoly was, and look how that turned out. There is a market for home and business delivery, or UPS and FedEx wouldn’t exist. While the Post Office complains about email and texting as competitors, they ignore the need generated by online shopping for delivery which they are ideally situated to service if they weren’t so abysmally inefficient. So getting rid of the 1st class mail Monopoly is likely to see a drop in delivery prices and an increase volume. Monopolies all suffer from the lack of the “feedback of competition” which would force them to improve.

    “It’s the feedback of competition that forces continuous improvements in Quality, Service, and Price in the Capitalist system.” Jacksonian Libertarian

  • Susan

    I often find it humorous that in Manhattan (as in NYC) there is a post office about every six blocks and when the USPS attempted to close a few of the unnecessary offices NYers complained how dreadful it was they’d have to walk a few more blocks.

    All the while, USPS are closing down rural offices in areas where people have to drive many miles just to get to the post office.

    Having left NYC end of 2010 for civilization my experience is that urbanites are spoiled children demanding their cake and candy for free while expecting those whose lives are challenging and difficult to suffer more for those sophisticated urbanites who also complain about global warming while they drive their cars out to the Hamptons every Friday afternoon.

    That said; NYC is such a myopically provencial place.

  • Bart Hall (Kansas, USA)

    Tom #4: The cornerstone of towns out here in flyover country is not the Post Office, but the *school*. Ask just about any resident of any small town: You can keep the Post Office if you lose the school, or the other way around … and a crushing majority will opt to keep the school.

    Besides, rural carriers are most commonly contractors, not employees, as are the folks dropping off and picking up mail sacks at little POs all up and down the line.

    To cut costs the USPS bases their rural contract amounts on volume (count) of mail — then measures that volume the second week of January, which they know to be the lowest volume week of the entire year.

    Perhaps the best thing to do with the USPS is to make ordinary First Class a true public utility under close government control, much like the old Rural Federal Delivery.

    Everything else gets privatized, but importantly the private entity is allowed to use current USPS mail boxes. They could also contract with the USPS for “final mile” delivery (Fedex already does this) and find other means of collaboration to make the entire thing more efficient.

    Couldn’t be any worse.

  • Tom Gates

    All, great comments and I totally agree with each and everyone of you. However, the real target in my post was Dr. Mead and his stipulation blaming this Congress for not fixing the problem, as I interpreted him, immediately. He offered zero ideas as you all have. It just rubbed me the wrong way.

  • Michael Goodfellow

    The scariest thing about the “fiscal cliff” is that, at around $600 billion, it’s not even enough to close the deficit — not by half! In other words, a measure so severe we cannot contemplate it isn’t even enough to start solving our fiscal problems….

    As for the Post Office, I don’t even bother to go to the mailbox most days. I pay all my bills online and get no letters or packages (except when something I order online is shipped that way!) The only reason to go to the box is to keep it from filling up with supermarket circulars.

  • Foobarista

    I also suspect “the net” may need to be worked into the system. Even if someone chooses to get a printed bank statement or whatever, there’s no reason it can’t be emailed to the post office, printed at some convenient central location, and delivered from there, versus printed in-house and physically mailed.

    In this case, only hand-written or signed media would require both physical pickup and delivery.

  • val nostdahl

    “the postoffice, it past record, it present condition, it potential relation to the new world era, Daniel Calhoun Roper, chairperson United States Tarriff commision and first assistant postmaster general, 1913-1917, free google.book to read, in 2000, 2001, postal federal workers were made to pay in 15 percnet more to their federal retirement systems under the 97 budget reconcilation act both the president and congress thanked them for their sacrifice . buget deficit only . in 2002, the increase was removed from the presidents bugets, then a extra federal retirment law came in to being for the usps only , since there were 2 overfunded retirment systems, so it took 5 billion from the profits, gave bonuess to top 12 executives and began the non staffing in the offices due to having too much money in retirement. wwww.postalmag.com/joygoldberguspsstress.pdf, http://www.billburrasjournal.org- misc, phoney excuses for diveriting usps revenues, ALEC/koch cabal the privitization of the usps for ups and fedex, bob sloan, http://www.exmaminer.com , Tim MC Cown june 10, 2012, behind all the schemes and lies of the privitization of usps, and the fight for democracy and the usps , sribd,net, http://www.savethepostoffice.com

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