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Home Publications Blogs Beat the Press Liberating the Post Office

Liberating the Post Office

Sunday, 11 August 2013 05:38

Gail Collins took up the Post Office and its large annual losses in her column yesterday. While she does make the point that the Postal Service has been hamstrung by Congress in its efforts to take advantage of its assets to move into new lines of business, this point deserves greater emphasis.

Congress mandated that the Postal Service should be self-sustaining in the same way as a private for-profit company. However it has repeatedly blocked the Postal Service from taking advantage of its enormous assets to move into new lines of business, primarily because it would mean increased competition for other businesses. In addition, as Collins notes, it has imposed a set of prefunding and accounting rules for its pension and retiree health benefits that are far more stringent than those used by any private business in the country.

Faced with the combination of restrictions on efforts to expand into new areas, a dwindling market for first class mail (the bread and butter for the Postal Service), and an impossibly stringent set of accounting rules, it is hardly surprising that the system would face large losses.

Comments (11)Add Comment
Get Government off the PO's Back
written by Robert Salzberg, August 11, 2013 6:25
Gail Collins obviously enjoyed making fun of the Post Office but her barbs were misdirected. The Post Office put forth a 5 year plan to modernize and prevent either shutting down or a taxpayer bailout. The only thing standing in the way is Congress.

You would think that our Free Market loving Congress would allow the PO to join in the fray, particularly since it has been run as a private corporation for decades and isn't supported by taxpayer dollars yet provides invaluable services to us all. A national wide program run by a private corporation for the good of the country, isn't that an ideal substitute for Big Government?

USPS vs. Congress
written by Robert Salzberg, August 11, 2013 6:55
The USPS is the most efficient postal service among the largest 20 economies in the world and delivers a jaw dropping 40% of the world's mail. Congress only has to do one thing every year, pass a budget, but with less than 2 months to go in fiscal 2013, Congress is taking a 4 week holiday and already has resigned itself to to CR instead of doing its job.

To add insult to injury, Congress, which generally doesn't show up for work till Tuesday and usually leaves by late Thursday or early Friday, is blocking the PO from not delivering mail on Saturday and forcing them to fund their health care benefits 75 years in advance.

Meanwhile, America has a more than $2 trillion dollar infrastructure deficit, high unemployment in construction, and record low borrowing costs but Congress refuses to fix now what will cost more to fix later.

written by Tom, August 11, 2013 7:47
For 46 cents I can have someone come to my house, pick up a letter and deliver it across the country in 3 days to someone else's house. I challenge anyone to find a private business that will do that. No business is free if they have to go to our congress for approval for anything they want to do. We should just go ahead and subsidize the USPS yearly until they become free of congresses stranglehold.
Much more integrated and important than people realize
written by Jennifer , August 11, 2013 8:14
In addition to the previous comments, Amazon and others actually use the post office for a lot of delivery routes. They have also actively lobbied against the post office attempting to act like a private business and be more self-supporting. There really isn't a question that left to its own devices the post office could stand on its own. But there is the other issue that the post office was designed as something more-as a way to connect the entire country, especially rural areas. People have even suggested that the post office is uniquely qualified to even expand in some ways, like providing essential banking services.
Wouldn't it be nice...
written by VicJane, August 11, 2013 8:50
if the USPS were able to offer prepaid debit cards at cost plus a pittance? Sigh.
How Economic Predators Play Catch-22 with USPS
written by Last Mover, August 11, 2013 10:31

Never forget how UPS and FedEx entered the market against USPS. Cream skimming. Take the profitable shipments and deliveries and dump the rest on USPS which creates a death spiral as price increases by USPS to recover only make it worse.

If USPS responds with competitive offerings, attack it politically as a government entity attempting to compete unfairly as a government monopolist with a private firm.

If USPS doesn't respond, attack it politically as an economic dinosaur incapable of functioning efficiently in a modern private market. Meanwhile jack up phony cost for USPS, cripple its entry into other markets, contract with USPS to carry its mail, and have selected mail of private carriers delivered the last mile by USPS to places UPS or FedEx won't go.

There, that should take care of it as standard operating procedure in todays America. Another self funded efficient government agency bites the dust so prices can quadruple on behalf of private sector predator parasites who replace it.
The "owned" congresscritters caused this problem - Daryl Issa is their leader
written by jumpinjezebel, August 11, 2013 1:40
Issa is doing everything he can to lead to the destruction of the USPS so his donors can get the work (read $$$). He's a crook a lier and a scoundrel.
Silence from the Tea Party
written by Matt, August 11, 2013 1:51
Given that the Post Office is one of a pretty small number of things actually *explicitly* created in the Constitution (Article I, Section 8, Clause 7), you'd think the Tea Party crowd would be hyperventilating at the thought of it being run into the ground.

Instead, they're cheering because it means one more unionized workplace bites the dust - a reminder that for all their claims of "respecting the Constitution" and "being post-partisan", they're really just corporate Republicans playing colonial dress-up.
written by Mark Jamison, August 11, 2013 8:49
Sorry, Dr. Baker, but the Collins column was actually pretty poor. Yes, Congress has hamstrung the Postal Service but the management of the Postal Service has been on a forty year mission to break the unions and privatize the postal network. The current conventional wisdom coming from the two committee chairs Carper (a dem) and Issa would eviscerate the postal network and transfer much of the postal network into private semi-monopoly hands.
The story has much more to it than Collins and, unfortunately you - who should know better, are letting on. www.savethepostoffice.comjamison
written by Masrk Jamison, August 11, 2013 9:20
I retired from the Postal Service last year. For the last five years I've been actively working to preserve postal services and the postal infrastructure. I've participated in several PRC dockets and I write for Save The Post Office, Blog started and administered by Steve Hutkins. The correct link to my work is: http://www.savethepostoffice.com/jamison

@Salzburg - The PRC found that eliminating Saturday delivery would save very little and would likely drive even more mail out of the system.
Congress is at fault here and its bipartisan. With the exception of Bernie Sanders, Pete DeFazio, and a few others most of Congress is in agreement with the PMG and the BOG. The direct mail industry has essentially captured the Postal Service. Several plans have been submitted that would privatize much of the existing network. These plans mirror the goals of Postal management and versions have been endorsed by people close to the administration like Peter Orszag former director of OMB and now high up at Citibank.
It's tempting to blame it all on Congress and particularly the Republicans but there are plenty of bad guys and more than enough blame to go around.
All of the current legislation that's been proposed would lead to further service cutbacks and retraction of the postal network which is essential communications infrastructure. The postal rate structure has been designed to transfer revenues into the hands of private companies costing 193,000 jobs in the last few years and lowering the wages and benefits of thousands more.
The crisis is a manufactured one relating to prefunding of retiree healthcare benefits, a system that was set up primarily to create neutral budget scoring for the 2006 PAEA. Most of the losses in the last several years, 80%, are due to this prefunding issue. There are also problems with the way workman's comp is accounted for and there are also large pension overpayments.
Basically Congress and postal management have conspired to create a situation where eliminating jobs, devaluing the remaining jobs, and closing large amounts of infrastructure becomes inevitable. Virtually anything Congress passes at this point will reinforce the current trend while making the Postal Service even more subservient to some fairly narrow interests in the mailing industry.
Basically, whether she understood it or not the Collins article was an endorsement of that outcome.
TRAP laws for agencies
written by Lrellok, August 11, 2013 11:56
This is the same thing as abortion laws that place requirements on clinics then make it illegal to meet those requirements. The notion that government agencies cannot be as effective as private actors is central to republicans. However, it is historically untrue, and would be easily disprove if private actors ever had to compete on even terms with a self financing government agency.

This whole post office debacle has nothing to do with mail or government. It is about conservatives proving they where right by rigging a test. By saddling the post office with burdens no private actor could ever sustain, they requiring it to compete with private actors, the GOP is hoping to gin up support for the continued fire sale of public assets.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.