Time to set the Postal Service free?
Neither debt, nor whopping losses nor employee pensions will keep the Post Office from delivering the mail. Well, actually they might. The Postal Service planned to announce new measures today in hopes of righting a ship that appears to be sinking.
The measures reportedly include cutting back mail delivery to five days a week (no Saturday delivery) starting next year. The Postal Service would also raise rates yet again. It hopes to convince regulators that sharp rate increases on some services are needed. The agency is also proposing to close some branches and expand the use of self-service kiosks.
But will it be enough? CNN Money points out what the Postal Service is up against:
The Post Office, an independent government agency, does not receive taxpayer dollars and is funded entirely by its own revenue. However, the Postal Reorganization Act of 1970 constrains the agency's operations. It prohibits USPS from closing small branches based solely on economic factors, and prevents the agency from expanding its services beyond postal delivery.
Post offices in some countries, including Italy and Japan, have boosted their sales by offering ancillary services, like banking. But unless Congress steps in, USPS cannot expand beyond the postal-mail realm.
And so far, Postmaster General John Potter has resisted privatizing or expanding services. From the Wall Street Journal:
Jumping into businesses such as commercial banking or telecommunication services would require an upfront investment that isn't feasible given the Postal Service's current financial woes. However, Mr. Potter didn't rule it out as a longer-term way to capitalize on the Postal Service's 36,500 retail outlets, more than McDonald's Corp., Starbucks Corp., Walgreen Co. and Wal-Mart Stores Inc. combined in the U.S.
Postal officials rejected other options, such as privatizing the U.S. Postal Service, increasing its $15 billion borrowing authority with the Treasury Department, or seeking direct taxpayer funding.
In a Washington Post editorial, Potter makes this point:
It's no secret that the Postal Service has been losing money since 2007. What are not well known are the financial demands of the Postal Reform Act of 2006 -- demands not faced by the private sector. Though the USPS is self-supporting, its finances are tied to the federal budget because postal employees participate in federal retirement plans. In 2006, Congress required that the USPS prefund 80 percent of future postal retiree health benefits. This will cost more than $5 billion a year through 2016. No other federal agency or private company carries such a heavy burden.
Without the prefunding requirement, the Postal Service would have been better able to weather the recent recession. In 2008, prefunding contributed to a loss of $2.8 billion. Without it, we would have been $2.8 billion in the black.
Something's gotta give here. It's clear that cutting Saturday delivery isn't going to save the Postal Service. I don't know if I can see the Post Office as a bank, but maybe? Certainly Congress needs to loosen its grip. Otherwise, the ship's going down.
What do you think?