Do we need the USPS?

The current political debate over the fate of the US Post Office illustrates the difference between the liberal and conservative view of the world.

The USPS is deeply in debt, has massive liabilities with regard to pension and other employee benefits and loses billions of dollars each year.

Some observers claim the post office is in bad shape because of funding required by Congress, but that’s not it. The accelerated funding for health benefits ended four years ago and the USPS did not make the required pension contributions. The generous benefits agreed to by the USPS over the years have created massive liabilities that must be recognized and eventually paid; a situation not unlike many irresponsible states.

The USPS retiree health care reform coincided with significant declines in revenues. From 2007 through the 2019 fiscal year, the USPS lost $77 billion and hasn’t contributed to its retiree health care fund since 2012. “USPS has missed $48.2 billion in required payments for postal retiree health and pension benefits through fiscal year 2018,” the Government Accountability Office reported in March.

There is a mindset among politicians, often supported by the public, that providing public employees with total compensation considerably in excess of what the private sector sees as affordable is acceptable. Why not, there is little or no accountability for government spending which is perceived an as infinite pool of money.

Democrats want to preserve the postal service as is and cite the jobs of 600,000 workers as a prime consideration along with the significance of the organization going back to Ben Franklin. They see it as fulfilling a social need and not as a business. The USPS is supposed to be a self-sustaining organization without taxpayer money, but it is rapidly going broke.

Shouldn’t we ask what follows a government bailout in 2020? The problems facing the post office are not going to change, but likely become worse in the future. How much are Americans willing to spend sustaining what would otherwise be a non-viable organization?

Republicans say if it can’t be sustainable as an independent organization it should not be bailed out with taxpayer money. They are accused of seeking to privatize the postal service and thus destroy it in the view of Democrats and, of course, the postal union.

It’s hard to imagine the US without a government run postal service. On the other hand, a few decades ago it was hard to imagine the changes that have occurred in how we communicate, changes that will increasingly reduce the need to deliver paper mail.

There needs to be compromise and an honest evaluation of the situation. We can’t simply shut down the post office and put 600,000 workers out of work. And we can’t ignore that something must change. We need to determine the vital services the USPS provides that cannot now be replaced by the private sector and establish a strategy to gradually move toward that level of service. We need a multi-year strategy to deal fairly with current workers and retirees as the size of the USPS declines to an efficient and sustainable level. That may well include public funds to support accrued pension and health benefit liabilities.

2 comments

  1. How about letting the USPS raise prices to cover their expenses and let the free market forces operate. Maybe there is no need to receive mail and junk mail at your residence 6 days a week.

    Liked by 1 person

    1. I like the way you think. I was trying to figure out if we really needed the USPS. I came up with the usual reasons of bills, official notifications, and for people who don’t have internet access.
      Then I thought about how much the government doesn’t use the post office either. Courts, DMV, and taxes are done online.
      What about just having post office boxes and you go pick up your mail when you feel like it? I do believe that a 5 day-a-week delivery schedule is a good start and let USPS cover their costs. FedEx, Amazon, and UPS are on my street everyday now. This might not be the case in every city but why not see if market forces let them bid on the deliveries? They are already on the street.

      I don’t see why the USPS is not run like a utility with investors and a government dictated profit margin. The only government oversight is if they fail to deliver and ensuring that they do not make too much profit. Electric utilities and water companies seem to do ok for the most part under that model.

      Like

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