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The Senate Goes Postal – Or, When the ‘Cure’ Kills the Patient

April 25, 2012

Many Americans love to hate the post office. Maybe it’s just resentment for delivering the bills, but the USPS suffers an unfair reputation for incompetence. The truth is, though, that the post office dependably does an excellent job.  The days of mocking the postal service for slow delivery are largely gone. Today, critics of the company point to its inability to turn a profit. And so, we are faced with Congress again enacting legislation to save the post office from itself.

Before you smugly scoff and tell me how you don’t need the post office, all they deliver is junk mail anyway — and besides, it’s the 21st century, everything’s done online! — think for a minute. Think about the thousands of rural communities which do depend on the postal service. These communities can’t get broadband access and many residents are poor enough that were broadband even available it would still be out-of-reach. There are no nearby malls,  so shopping by mail is a way of life, not simply a convenience.

And yes, there are old people — old people who still write letters and rely upon that correspondence for human connections. There is also the little matter of voting by mail – the one sure-fire way we have to actually increase voter participation (and the only option in the state of Oregon). So whether you could live without the USPS isn’t really the point – there are millions of people who couldn’t.

Unfortunately, that’s where we’re headed. The Senate is set to vote today on a financial overhaul bill for the Postal Service. The version of postal reform already passed by the House differs from the Senate version on just how many jobs they’re going to slash – 100,000 or 200,000. (About 20 times more jobs than will be created by the Keystone XL pipeline.) But whatever the final version ends up being, both the House and the Senate plan to “fix” things through layoffs, office closings, and the elimination of Saturday delivery. Economist Dean Baker analyzes the likely outcome:

Death, or at least a near death experience, is the likely outcome of S.1789, the bill to downsize the Postal Service that the Senate is scheduled to vote on… The bill would end Saturday delivery and also raise the target delivery time from 1-2 days to 2-3 days.

The idea is that people won’t generally care if a letter takes 3 days rather than 2 to reach its destination. While that is probably true, this will certainly increase the frequency with which a letter takes a week or more to reach its destination, and people do care about and remember these instances. This additional delay is likely to seriously reduce the standing of the Postal Service in most people’s eyes, leading to a further erosion of business.

Oh well, you say – got run it like a business, right? Here’s the thing: were the USPS actually allowed to run itself as a normal business, these draconian cuts wouldn’t be necessary. Every step of the way, Congress has been there to cripple the company and its ability to compete.

  1. Back in the ’70s, when the USPS became a government-run company – rather than an agency – Congress saddled the fledgling company with huge pension liabilities incurred before the new company was even created (Cost: up to $75 billion)
  2. Congress also restricts the postal service’s freedom to invest its pension fund. Unlike any other company in the country, USPS can only invest pension funds in government bonds
  3. In 2006, Congress got the bright idea to force USPS to rapidly pre-fund its retirement healthcare program — you guessed it, at a rate much higher than any private company in the U.S.
  4. “If the Postal Service had a more reasonable prefunding requirement and were allowed to invest its pension in the same way as private companies, it would have run a profit over the last decade.”
  5. Finally, Congress seems unable to not interfere on behalf of big corporations.
Dean Baker provides an example of that last one:
About a decade ago, the Postal Service had an extremely effective ad campaign highlighting the fact that its express mail service was just a fraction of the price charged for overnight delivery by UPS and FedEx.The two companies actually went to court to try to stop the ad campaign. When the court told them to get lost, they went to Congress. Their friends in Congress then leaned on the Postal Service and got it to end the ads.
It’s a good thing for those millions of people who rely upon the Postal Service that Congress is full of so many savvy business people who know just how to turn this ship around, huh?
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