Tag: Postal system

Cutting USPS Loose

After spending quite a bit of time complaining that the post office is losing money (partially because they are being forced to actually fund their pensions like a regular business), Congress has turned a quick about face:

A spending measure passed by the House on Wednesday to keep the government operating through September requires that the Postal Service maintain a six-day mail delivery schedule, a potential setback for the agency, which announced last month that it planned go to five-day deliveries to cut costs.

Faced with billions of dollars in losses, Postal Service officials said last month that beginning in August the service would stop delivering mail on Saturdays, though it would continue to deliver packages on a six-day schedule. The agency said cutting Saturday delivery would save about $2 billion a year.

The agency lost about $15.9 billion last year, partly the a result of a 2006 law requiring it to pay about $5.5 billion into a health benefits fund for its future retirees. A drop in mail volume has also hurt the agency’s finances.

Congress also wants to prevent the closure of seldom-used rural post offices.

Look, there is no magical efficiency engine that the Post Office can kick to make the system work. Either they massively raise postal rates or they cut services or we continue to pour billions of dollars into them. It’s possible — possible — that a massive overhaul of the system would make everything work. But given the maze of regulations and existing contracts, such massive reform is almost impossible. And it would certainly not work with six-day delivery and thousands of rural post offices. And if you think Congress is interfering now, just wait to see what they would do if USPS tried to change union contracts.

(If you want some amusement, throw these facts onto a liberal blog and read all the ensuing comments about how the postal service connects us all to each other like some kind of national psychic mucus. Even if you go in for such woozy sentiments … that was not the intention of the post office.)

The alternative to letting the Post Office cut services is allowing private companies to compete with them. While this ideas has its merits, it would only make the situation with USPS itself worse. Private companies would instantly slurp up the most profitable parts of the business leaving USPS — tied down by federal regulations and union contracts — to become an even purer money hole. You could, of course, then allow USPS to sink completely below the waves. But that would leave the government, by federal law, on the hook for their pensions and leave rural areas either cut off or paying gigantic postal rates. And that’s leaving out the thorny Constitutional issue that Congress is mandated to establish post offices and post roads.

In any case, those are the choices: privatization with the problems it entails, continued massive subsidies or curtailing of services. There is no other alternative.

But Congress has never felt particularly bound by the laws of mathematics. They want a monopoly Post Office that delivers everywhere six days a week at current prices but doesn’t lose any money. They might as well wish for a postal service run by unicorns.