Credit: JohnathanLobel / Foter.com / CC BY-NC-SA
The United States Postal Service had a terrible first quarter, losing nearly $2 billion in the first three months of the year. It continues to struggle to survive in a society that increasingly uses it less and against a backlash-wary Congress reluctant to allow it to reduce services. The Los Angeles Times reports:
The Postal Service is a government corporation, which means it is organized like a business yet subject to congressional oversight. Consequently, reform is difficult, said Mike Schuyler, a fellow at the Washington-based Tax Foundation who has studied postal issues for nearly two decades. "The Postal Service has far too little flexibility when it needs to adjust, and it's really in handcuffs because of all the requirements Congress puts on it," Schuyler said. Postal officials recently tried to end Saturday letter delivery, which could have saved $2 billion per year, but Congress blocked it. A legislative proposal to replace doorstep delivery with curbside delivery, which would save $4.5 billion, failed last year. A plan to close thousands of rural post offices was abandoned after postal officials deemed the closures would "upset Congress a great deal," Barnett said.
It's unfortunate news that Congress refuses to let the post office operate like an actual business, even though that's what it's supposed to do. What should concern consumers (and taxpayers) though, is that every story about the postal service's troubles inevitably turn to its system of pre-funding the health care costs for its future retirees. Despite the huge crisis playing out in cities and states across the country because of underfunded retirement and health programs for public employees, this effort at fiscal planning is seen as some sort of outrage:
The pre-funding payments and other measures in the 2006 law have led some, including political activist and former presidential candidate Ralph Nader, to call the Postal Service's situation a "manufactured crisis." Only one other federal agency, the Defense Department, pre-funds future retiree health benefits, the Government Accountability Office said. … The Postal Service and postal workers unions agreed to the 2006 legislation because at the time it looked as if the service could afford it, said congressional and union staffers who worked on the legislation. The recession changed that, affecting banks that typically send lots of mail and homeowners who receive it, said Jim Sauber, chief of staff of the National Assn. of Letter Carriers. Sen. Bernie Sanders (I-Vt.) and Rep. Peter A. Defazio (D-Ore.) are sponsoring bills to eliminate the pre-funding requirement and allow the Postal Service to raise rates more freely, among other changes. Unions support the bill, and it has some supporters in the Senate and the House.
And when the funds come up short after the fact, as is happening all over the country, who is on the hook then?
FUN UPDATE: Man's teenage son has no idea how to mail letters.
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