Red ink has seized the U.S. Postal Service corpus like a cancer. The post office’s life-saving prescription is to amputate a limb — the organization this week announced that starting in August it intends to discontinue Saturday delivery of the mail.
That may forestall the patient’s death, but only temporarily. The USPS has systemic problems that can only be fixed with the help of Congress.
The post office has lost more than $40 billion since 2006, including $16 billion last year. Cutting Saturday delivery will save it about $2 billion annually.
Part of its sagging fortunes can be blamed on technological and cultural changes that have reduced the volume of mail and corresponding revenues to the USPS. Increasing numbers of Americans now correspond via text or email instead of the first class “snail mail,” as has the number who pay their bills online. That’s a trend that’s not going to reverse. FedEx and UPS also have eaten into the Postal Service’s package shipping business.
The postal union points a finger at a congressional act — the Postal Service and Retirement and Health Benefits Act of 2006, which requires the Postal Service to fully fund future retiree health benefits for the next 75 years by 2016. That’s taking money out of current operations and setting it aside for the future.
However, John J. Walters, writing at Reason.com, notes that the retirement funding represents only a $5.4 billion to $5.8 billion annual expenditure, leaving $10 billion of losses to account for.
Congress, again, shares some of that blame because it sets postage rates. Congress standardized stamp prices in 1845 at 5 cents for a letter to be delivered to an address less than 300 miles away and 10 cents for one more than 300 miles away. According to Walters, if Congress had allowed prices to increase with inflation, it would cost $1.19 to send a first-class letter today, $2.38 if it were traveling more than 300 miles. Instead, it costs 46 cents regardless of distance.
That’s a good deal for American consumers, but it’s killing the Postal Service’s bottom line.
Congress also has obstructed the Postal Service’s attempts to cut costs and improve efficiencies, such as by closing post offices. Federal lawmakers hear from voters in their districts if the local post office is slated for closure and block approval. The proposal to end Saturday delivery also will require congressional approval.
Does Congress, which in 1970 moved the USPS from a Cabinet agency to a supposedly “self-sustaining” model, have the foresight and courage to actually, finally allow the Postal Service to set its own rates and delivery schedules without government meddling and put it on a course toward profitability? Given the dire financial situation, the alternative eventually will be to subsidize the USPS with tax dollars to maintain a broken status quo.
Give the Postal Service the flexibility it deserves — and desperately needs.
