Thursday, February 7, 2013

Post Office Losses ... Death By A Thousand Cuts?

The U.S. Postal Service is a government supported (that means taxpayer) private company, whatever that means. To me it means that it's just another entity that doesn't officially get counted in the government tally of fiscal deficits each year. But however the counting occurs, money is money, and when receipts don't cover expenses, losses take place. In other words, while the post office continues to lose billions year after year, taxpayers get the bill.

The post office isn't now and never has been operated like a private business, because if it did it would have been declared bankrupt and ceased operations long ago. The postal union leaders and their political allies in Washington have teamed up over the years to provide "free" physical mail deliveries to our homes six days a week and at minimal DIRECT cost to the individual sender.

That is, we can send mail from one end of the nation to the other for 46 cents, and receive it for no charge. That obviously doesn't come close to covering the costs directly incurred by the post office's operations. Accordingly, the real bill is then INDIRECTLY and ultimately paid by all taxpayers.

Unfortunately, We the People as taxpayers and homeowners like the "low cost" home delivery service, and simply have never taken the time to acknowledge and reflect on what it's really costing us.

Now more political game playing is about to take place in the name of fiscal prudence. The postal authorities have announced a plan to stop delivering mail on Saturdays which purportedly will reduce its annual losses by about $2 billion annually.

Since the post office racked up about $16 billion in losses last year, that leaves another $14 billion for taxpayers to fork over.

Meanwhile, many of the politicians and postal union leaders will now proceed to wring their hands about stopping Saturday deliveries and hope the taxpayers will continue to overlook the other billions in annual losses for which there is no plan to eliminate.

My bet is that in the end, not much will change, and inertia will largely prevail at the post office, although maybe not on Saturdays.

Saturday Mail Delivery Nears End has the story:

WASHINGTON—In an unusual act of independence, the U.S. Postal Service said Wednesday it will end Saturday mail delivery to homes and businesses beginning Aug. 5 to curb losses that ballooned to $15.9 billion in its most recent fiscal year.

The move sets up a potential confrontation with Congress, which in the past has forbidden the agency from ending Saturday delivery. It also could force businesses including newspapers and magazines to rethink how they reach customers on weekends.

The U.S. Postal Service will stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan to stanch losses.
The action would apply to all mail, including letters, bills, catalogs, periodicals, advertising and Netflix rental movies. It wouldn't apply to packages, including the premium-priced Express Mail, which mail carriers would continue to deliver Saturdays.

The Postal Service said it will end Saturday delivery starting in August to curb losses. The move would force some businesses to rethink how they reach consumers over the weekend.

Postmaster General Patrick R. Donahoe said that ending Saturday delivery—which the postal system has provided since 1863—would help save the agency about $2 billion annually.

In an interview, Mr. Donahoe said the move is part of an ongoing five-year strategy to turn around the agency's finances. Other parts of the plan include a bigger focus on package delivery and reducing health-care costs.

Mr. Donahoe said the strategy is driven by grim mail-volume figures: In 2003, the agency delivered some 50 billion pieces of stamped mail, while in 2013 that number is expected to be 21 billion pieces.

With stamp prices now 46 cents, the agency would take in an additional $13 billion this year if it had the stamped mail volume it had just a decade ago, he said.

"It's a reasonable business action and common sense; when revenue drops you have to make changes, you can't run away from it," said Mr. Donahoe.

While some elected officials raised doubts about whether the Postal Service can achieve $2 billion in annual savings by dropping Saturday delivery, Mr. Donahoe said the figure is achievable.

He said a planned reduction of 45 million work hours will result in $1.9 billion in annual savings, while resulting cuts to transportation costs will account for $200 million more in savings. The plan requires no layoffs, he said, largely because the Postal Service has reduced its head count by 193,000 people since 2008.

Under the plan, letter carriers will work their regular routes Mondays through Fridays. On Saturdays, the Postal Service will use its ranks of flexible, part-time carriers to deliver parcels on routes that are custom-designed each week depending on where packages are going.

Mr. Donahoe said he expects the agency to prevail this time in ending Saturday delivery. For nearly four decades, four different postmaster generals have tried to curtail the service.

Congress generally controls the Postal Service's long-term financial affairs and the services it provides. For years, Congress had attached a rider to its annual appropriations bill requiring the Postal Service to provide six-day delivery. . . .

Sen. Tom Carper (D., Del.), chairman of the Homeland Security and Governmental Affairs committee, which oversees postal operations, expressed disapproval Wednesday of ending Saturday service.

"I am disappointed by the Postal Service's announcement today," he said. "For nearly three decades, it has been the clear intent of Congress that the Postal Service provide most communities with six days of mail delivery."

Rep. Gerry Connolly (D., Va.) said Mr. Donahoe lacked the constitutional authority to eliminate Saturday delivery and asked the Postal Service to provide legal justification for the action.

Other legislators applauded the cost-saving plan. "Supporting the U.S. Postal Service's plan to move forward with five-day mail delivery is one such solution worthy of bipartisan support," Rep. Darrell Issa (R., Calif.) and Sen. Tom Coburn (R., Okla.) said in joint statement."

Summing Up

The 'hot potato' is now in the hands of Congress. What will they do? As little as possible while attempting to appease the unions and voters who depend on the post office for mail delivery, of course.

But what won't Congress do? Well, they won't act in a fiscally responsible, taxpayer friendly way. Doing that would involve a private sector solution and acceptance that the "newfangled" internet and e-mail have taken the place of the necessity for the convenience of "free" physical mail deliveries.

So while the Pony Express is no more, the old fashioned and costly post office system lives on. The truck has replaced the horse. But the government isn't quite ready to trust the capabilities of the internet. Hence, taxpayers beware.

On one hand, the discussion in Washington is all about fiscal sanity and deficit reduction these days. On the other, Congress will be reluctant to go against the postal unions and the wishes of its vocal constituents that the Saturday deliveries continue. Business as usual will be the goal, perhaps tempered by some small token or symbol of fiscal sanity on the part of Congress. But no more than a token or symbol, mind you.

So whatever happens at the political zoo in Washington, if anything, the billions of dollars in annual post office losses and resulting taxpayer subsidies won't go away anytime soon, if ever.

The games people play in government and the unions are actually quite silly, of course, but they're terribly expensive as well. That said, as long as the We the People are willing to foot the bill, the bulk of the Congressional silliness and the billions of dollars in annual taxpayers losses to support the horse and buggy days will continue, even if Saturday deliveries stop.

$2 billion down and $14 billion to go. Stopping all government mail service is the only way to eliminate the deficits and taxpayer subsidies.

E-mail, UPS and FedEx are ready, able and willing to replace the U.S. Post Office and save the taxpayers billions. But don't look for anything sane like a private sector solution to receive the approval of the aristocratic politicians. They're too busy appeasing the postal unions and the unsuspecting taxpayers and citizens.

That's my take.

Thanks. Bob.

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