May 27, 2020
The U.S. Postal Service: It's Future Is At Risk
For 228 years our country has depended on a government controlled agency to deliver the mail. Checks, magazines, medicine and supplies, catalogs, gifts, letters...all manner of communication and commerce have arrived, without fail, six days a week, in our mailbox.
The shift in how we communicate, shop, pay bills, and receive income has changed over the past few decades. As a result the U.S. Postal service lost nearly $9 billion dollars in 2019. With the economic effects of Covid-19, that loss will certainly be much worse this year.
The Postal Service receives no taxpayer funding. It must deliver whatever it takes in to every address in the United States, six days a week, and pay for all that strictly on income. As an added problem, the postal service must pre- fund retiree health benefits for 75 years. Seventy Five years! No other government agency, even those who receive tax funds, must do so. Obviously, that is a burden that almost guarantees the service will operate in the red.
All that money, more than $110 billion, is supposed to be held for future retirees. In a typical government move, most of it has been siphoned away to help pay down the national debt. So, the enforced savings plan does not have the resources to pay future needs.
The cost of mailing letters and packages has risen steadily. Under the category of unintended consequences, each price increase results in lower mail volume, thus less income. The problem feeds on itself.
When the postal service officials have presented requests to Congress to modify or improve service, they have often been rebuffed. In 2013, for example, there was a move to eliminate Saturday delivery, saving $2 billion dollars in desperately needed expenses. Congress vetoed that idea, demanding the service continue with universal, six-day-a-week service, but providing no additional funds. Basically, the service was told:" You don't generate enough income to fulfill your mission. Tough Luck. Figure it out."
So, the Postal Service has projected it will run out of money in September. A recent request for bailout money has been rejected out of hand by Congress and the administration. Again, a reminder: this organization is like any private company that has requested a bailout, except it must provide its full range of services, and cannot raise its prices without Congressional approval.
President Trump has stepped into the mess, calling the U.S. Postal service a joke. He demands the service raise its package shipping rates by 400%. Of course, he fails to realize that package shipping is the one area in which the postal service generates the bulk of its income. First class and junk mail lose money.
Quadrupling the rates would drive most of those customers to other services, like UPS or Fedex, accelerating the death spiral. It would impact Amazon, owned by a man in great disfavor inside the White House. That fact seems to be the major motivator.
Now, here is where the survival of the U.S. Postal Service suddenly becomes incredibly important. Because of the pandemic, it is very likely that much of the November election will be conducted by mail. A crippled organization financially incapable of meetings its mandate will be in charge of sending out and receiving tens of millions of ballots.
When there are problems, as there certainly will be, the losing side will likely claim all sorts of miscreant behavior, throw the totals into question, and demand the results be voided or investigated. The result? The current occupant of the White House and all members of Congress up for election, will remain firmly in place. The November election will become a non-event until courts sort it all out.
To demand that a service like the Post Office do a particular job but not provide a way to pay for it is ludicrous. Is there waste in the organization? Sure. There is waste in anything. But, that is not why the U.S. Postal Service is failing. It is about to go out of business because of the requirements put in place by its boss (Congress) are not properly funded, and attempts to adjust its business model to reflect reality are shot down.
There are some in Congress who believe the postal service should be privatized. That would likely result in an elimination of service to many rural and out-of-the-way places, since they are expensive to serve. It might mean a reduction in service to only a few times per week and for only certain types of mail. It certainly would usher in much higher prices. The company granted this hold over a basic communication and commerce service would be picked for its support of a certain political viewpoint. In short, allowing a private company to control our country's mail service would be a very bad idea.
Two weeks ago, a new Administrator of the Postal Service was appointed. He has zero experience in this field; his only qualification is he is a supporter of and donor to the administration. It is pretty obvious this will not be the route to solutions.
The failure of such a basic service to our society has enormous consequences, never more so than at a time when a general election hangs in the balance.
Wiser minds than mine need to find a solution before it is too late.