Wednesday, March 27, 2013
Is the U.S. Postal Service a private corporation or a government agency?
It’s both at the same time. And that is a major reason the Postal Service has financial troubles.
The Postal Service is a private corporation when it has to cover its cost with its revenue. The Postal Service is a government agency when it has to follow the whims of Congress as it imposes mandates.
The Postal Service lost $15.9 billion last year. Those kinds of losses can’t be sustained.
Postal officials have wisely been looking for ways to trim expenses. Plans are in the works to end Saturday mail delivery in August. Going to a five-day mail delivery schedule is expected to save $2 billion a year.
But last week Congress took action to put the kibosh on cutting Saturday service. Both houses of Congress passed legislation mandating six-day delivery. President Obama is expected to sign the legislation into law.
Lawmakers have authority over the Postal Service because it receives an appropriation to fund mail for the blind and overseas ballots. That amounts to 1 percent of its operations.
So the Postal Service will likely have to continue six-day service while swimming in red ink. Its ability to delivery mail even one day a week is threatened as a result.
Ironically, it is federal regulations that account for the bulk of the Postal Service’s money trouble.
About 85 percent of the Postal Service’s deficit stems from a congressional mandate. The post office has to pre-fund the postal service retiree health care and pension benefits 75 years into the future.
That mandate seems to be either extreme or unnecessary.
The Postal Service Inspector General has determined the pension is over-funded and reserves for retiree health care are far higher than the federal government and nearly all large private companies.
At the same time, the Postal Service enters into unprofitable deals with junk mailers that undercut the ability of private businesses — including newspapers such as the Union-Bulletin — to get that business.
This is a lousy way to run a private business and a government agency. If it is supposed to run like a business, then Congress should let it.
But if Congress is going to continue heaping demands on the Postal Service it deems for the greater good of the country, it needs to reasonably subsidize operations.