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Wednesday, October 17, 2012

Post Office Is Tapped Out ... Taxpayers to the Rescue?

Well, the post office has done it again. They're out of money.

However, with all the talk about the fiscal cliff, fiscal responsibility, middle class salvation, government "help" and government spending reductions, our "public servants" are being painfully silent right now about what to do concerning the post office's billions of dollars in ongoing financial losses.

Postal Service Hits Borrowing Cap for First Time updates the saga:

"The U.S. Postal Service in September hit its $15 billion borrowing limit from the U.S. Treasury for the first time in its history, leaving the agency with only the revenue it takes in from selling stamps, shipping and other services to cover its operating costs. . . .

"Being at the limit is a serious situation because our limited liquidity does not give us operating flexibility," he said. "Without passage of comprehensive legislation as part of the Postal Service's business plan to return to financial stability, we continue to project low levels of cash.". . .

The Postal Service taps lines of credit from the Treasury to cover costs when revenue falls short. But declining first-class mail volume, growing retiree obligations and other expenses have led it to rely often on government loans to pay for its operations. The agency had a $5.2 billion loss in the quarter ended June 30, the most recent data available.

Postal revenue should be on the rise in the coming months because the holiday season is typically the most profitable time of the year, postal officials said earlier this year. A high volume of election related mail this month will also aid postal finances.

The additional revenue should give the service breathing room for the next several months. In the past, officials said they could manage the limit by timing expenses and skipping mandated payments for future retirees' health care. Employee paychecks and benefits for current retirees won't be affected.

The $15 billion borrowed from the Treasury doesn't include $11.1 billion in retiree health-care payments the service defaulted on in August and September. Those payments were tied to a separate account at the Treasury.

Postmaster General Patrick R. Donahoe has urged Congress to pass legislation to fix the agency's finances. He says the agency needs more power to cut costs, including the flexibility to end Saturday delivery.

The Senate this year passed legislation—though Mr. Donahoe said it didn't go far enough—but the House didn't take up a proposed bill before going on recess until after the November elections."

Summing Up

Government doesn't have time now to deal with these financial issues of the postal service.

The politicians are too busy running for office.

After the upcoming election, however, they'll be back to "serving the public" again, and that means tapping the taxpayers for billions of additional dollars to keep the post office union leadership happy, the postal workers employed and the retirees' benefits adequately funded as well.

As for me, I would like to be presented with a menu of prices (related to real postal service costs) for a la carte services offered by the postal authorities. Then I could pay for the services, if any, that I wanted from the post office, including deliveries.

After looking over the menu and its offering prices, my guess is that I'd elect to use e-mail exclusively, skip receiving 100% of the political ads currently delivered, drop 100% of the current junk mail advertising deliveries as well, and pick up my own mail at the local post office periodically.

My guess is that most others would choose to do so as well. But that's not for me to decide.

That said, why can't I choose either to buy or to refrain from buying services offered by the post office? Why not let the market rule instead of the politicians?

In other words, consumers, providers and the invisible hand of the free market can get to the right answer without unnecessary government intervention and rule making.

And it wouldn't cost us tens of billions of dollars to do so.

At least that's my take.

Thanks. Bob.

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