Monthly Archives: October 2011

USPS: Bankrupt and in the Red Zone?

The fact that the USPS needs to restructure financially is really no new news.

Post Office: bankrupt in 2011?But that the restructuring has now become a political football is unfortunate and is bad for all of us.  It not only adds emotions to what should be a rational process.  It also has polarized the discussion — if you are trying to restructure and save the US Postal Service, you ‘must be a progressive lune.’

The USPS has been restructuring for a while now.  It has downsized its workforce — down 35% over the last decade.  It has developed and implemented automation — the USPS now has the third largest computing infrastructure in the world.

And even though people are mailing less now, the USPS still survives on the revenue it collects from the postage it sells, rather than from Uncle Sam.

Those who wrote the US Constitution believed that the Post Office – and the Post Roads that connected them – would be a worthy resource for all Americans.  Although there were few national institutions created through the Constitution, the Post Office was one of them.

The Post Office helps ensure that we stay connected as a country.   Our first Information Highway, the USPS now delivers over 160 billion pieces of mail per year.   And even if your Internet crashes, your email gets hacked or your power grid goes down, you can still mail a letter across the continent for less than a dollar.

Today’s crisis that has been forced upon the USPS is man-made by politicians.   Congress legislated that the USPS would need to make accelerated payments to fund its healthcare commitments for its future retirees.   The annual payment — to be made to the US Treasury — was made into law in the Postal Accountability and Enhancement Act of 2006.   No other government agency, or private business, is compelled to make such an onerous expenditure.

In 2011, this payment amounts to $5.5 billion. And although the USPS can pay all its operating expenses, it doesn’t have enough to make the payment.   You can’t get blood from a stone.

And you shouldn’t throw the baby out with the bath water.

Most Americans, if provided the facts, would say the right thing to do is temporarily stop the mandated payments, or at least restructure them.  Keeping accelerated payments in place would be like asking for the USPS to operate with one hand tied behind its back.

Unfortunately, restructuring is portrayed by spin-meisters as a ‘bail out.’  (This is where the political football comes in…)

The irony is that there is actually a surplus of funds in the postal portion of the Civil Service Retirement System, the big pension fund that Federal employees pay into.  According to private sector auditors, there is between $50 and $75 billion in postal pension surplus.   So calling restructuring a ‘bail out’ is rather disingenuous.

Sure, there is  more that the Post Office needs to do to provide services that are relevant to 21st century Americans, work to have more autonomy on how it operates, and to keep lowering costs.

But to frame the problem in a way that pits Left versus Right is just plain wrong.

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