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.