The United States Postal Service is under a financial weight that must feel like a postman’s mail bag at Christmas.

The USPS loses $25 million every day and has run $41 billion in the red over the last five years.  The decline in the demand for snail mail (particularly the most profitable First Class mailings), and the economic downturn have contributed to the spiral toward financial collapse.

Postal Service mail volume has dropped from a peak of 213 billion pieces in 2006 to fewer than 180 billion today.

Additionally, the USPS is required by law to pre-fund retiree benefits, at a cost of about $5 billion annually.  That guarantees the solvency of the retirement programs for generations to come.  It’s possible that the payment schedule could be spread over a longer period, easing the annual burden, but that would take an act of Congress.

But in the meantime, Postmaster General Patrick Donahoe has proposed modifying Saturday delivery.  Mail carriers would no longer deliver regular mail and periodicals on Saturday, although packages–including prescriptions—and priority mail would still show up in the mailbox.

Naturally, this is controversial.

West Virginia 3rd District Congressman Nick Rahall is particularly upset.  He told me on Metronews Talkline Thursday that Donahoe is willfully ignoring an appropriations rider that Congress has passed every year since 1986 that requires 6-day mail delivery.

“They’re taking the law into their own hands,” Rahall fumed.  “We just can’t stand by and allow this to occur.”

But the Postal Service is in a tough spot.

Congress separated out the old Post Office Department in 1971, creating the current USPS, a quasi-public/private agency that is supposed to pay its own way.  Since then, the USPS has struggled to operate like a private business while continuing to answer to the whims of Congress.

As one former postmaster told me, it’s like trying to run a business with 500 CEO’s.

Postmaster Donahoe can expect a fight, but he’s on the right track.  Cutting the Saturday service will save about $2 billion a year.  That doesn’t solve all the financial problems, but it’s a start.

Donahoe should also take a hard look at the employee costs, which make up 80 percent of the Postal Service’s budget.  The agency may be able to close some post offices.  And Congress should review the amortization schedule for the pension benefits.

Changes are necessary if we want to keep this vital service.  The Saturday cut will upset a lot of folks, but as Donahoe accurately 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.”

Washington could use more of that kind of thinking.

 

 

 

 

 

 

 

 

 

 

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Comments

  • PostalWidow

    according to NALC legislative fact sheet from 2000,2001, postal employees had been forced to pay in extra to their retirement systems to FERS and CSRS , under the 1997 budget reconciliation act for budget reasons only. This was in turn overfunded the pensions by billions of dollars, FERS by 15 billion and 140 billion for CSRS , so then the PAEA came in to effect due to having too much money in retirement and it began to take 5 billion a year from postal profits, while also giving bonus money to the top executives in the USPS, 13 in 2007, including the PMG who got a 72 thousand dollar raise and topped his salary making twice what the President of the US did with benefits and full retirement worth 5.5 million in 2010, after starting to shut down office, and do not replacement of workers due to retirement for having too much money in retirement. lobby efforts behind the PAEA were funded by the ALEC /Koch group, can find the article at VLTP. net by bob SLOAN APRIL 2012, called the ALEC/Koch Cabal Pursuing the Privatization of USPS for UPS and FedEx, also Tim McCown article in examiner.com archives of June 2012, called behind all the schemes and lies of privatization of USPS.

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  • Just the facts

    I will not miss the Saturday delivery. Don't know why they did it anyway. The USPS is a dinosaur - just admit it. We can be so much more efficient and so much more frugal of our natural resources via the use of electronic mail and such.

  • Jim

    It's sad for a lot of small towns to see their post office close. If the U. S. Postal Service can't afford to keep the office open, maybe these small communities could pay to keep them open. Give them rent-free space in City Hall or something. Heck, the town could raise taxes or borrow money to hire their own local mail carrier if they really want one.

  • WV Patriot

    USPS workers pay very little for their Mailhandlers Health Insurance. the rest of the federal govt work force pays about $400.00 a month for family coverage. Its time they align and pay what every other fed govt employee pays!! Another union sponsored and negotiated benefit that flecces the tax payers. Also, saving $2B a year wont put a dent in the $41B deficit. so what is th rest of their plan to attain solvency?

    • PostalWidow

      family coverage is about the same for postal workers so your misinformed.

  • BrianHed

    I'm for mail delivery every other day. If one day makes you angry or dead send in express.

    Also, institute incentives for people to receive their bills and bank statements online and eliminate junk mail and you will see that actual mail that needs to be delivered will require 1/10th of the resources.

  • ShinnstonGuy

    Apparently these politicians are still clueless. The reason these people--West Virginia's scorn Lisa Jackson, the Postmaster General, and probably more to come--are taking action is because Congress won't do a darn thing. Just look at this case: as soon as closing post offices was mentioned last year our West Virginia delegation ignored the good of the country and stuck with their own self-interests to block it. Now Rahall says he is basically going to block the Saturday shutdown. For heaven's sake, when are we going to vote these people--ALL OF THEM--out of office. Instead of protesting Wall Street we should go after the real fat cats under the big white dome.

  • Red Dwarf

    So I'll have one day less per week when I have to take the mail that was left in my mailbox and carry down it the road for the person it was addressed to? And there will be one less opportunity for my letter carrier to knock my mailbox down like he did three weeks ago? Yay!

  • mntnman

    Finally, acting like a business and making a sound business decision. On to solvency.

  • DWM

    Hop,

    The USPS provides a great service and no one will miss the loss of Saturday service. What they really need to do is allow them to be a free enterprise and have no government involvement. If they did, there is no doubt in my mind they could cut costs and improve service.

  • Patchy

    The USPS are in a tough spot in part because they interact with the public in the millions every day. Like McDonald's, Starbucks and Walmart, their ubiquity leads to a surfeit of opinion on their organization and operations.

    But have the Posties ever considered replacing one of their advertising posters for Eid and Kwanzaa stamps with a mirror and contemplating their reflection?

    It's a cliche to say that prices go up while service goes down, but it remains a truism. Why?

    Junk mail has always been an annoyance. In the age of e-mail it is also an insulting redundancy. Yet the USPS continues to lower rates and deliver more of this rubbish. They refuse to offer a simple opt-in/opt-out that could prevent the shockingly wasteful cycle of glossy paper printed, delivered to the USPS, delivered to mailboxes and immediately discarded to be carted off to a landfill. The open secret is that all this dross pays the bills, but that doesn't excuse the hypocrisy of the USPS and its supporters who pay lip service to environmentalism and recycling. One should not need to recycle that which should never have been created in the first place.

    Pro-USPS say: a flat-rate stamp to deliver mail anywhere in the union is a good, equitable and just thing. Economic realists say: sheer madness. People accept that shipping UPS/FedEx packages to Oregon should cost more than shipping them to Ohio and pay the difference willingly. They grasp the concepts of variable costs associated with fuel, logistics, labor, etc. We'll leave the issue of flat-rate postage as a metaphor for collectivism for another day.

    Two heart muscle cells, when placed together in a lab dish, will soon begin beating in sync. Two government workers, when encountering each other on or off the clock, will immediately strike up a conversation about retirement, benefits, vacation, etc. The McDonald's, Starbucks and Walmart workers talk about pricing, customer service and turnaround times. If we are to believe the PR about the USPS as a self-sustaining entity then why do they look to their sclerotic DC bureaucratic brethren for guidance rather than emulating profitable private-sector dynamos?

    • Hop'sHip

      How many Walmart workers have you talked with, Patchy? I have experienced good and lousy service from USPS workers and the same from UPS and Fed Express workers. I refuse to draw broad conclusions about groups of people based on such anectdotal experience.

  • jethro

    my rural carrier is friendly enough but like most government type workers they have poor attitudes are generally rude and really dont care about customer service. that includes city and county government workers. i know that not all are that way but that is the perception. one or two bad apples spoil the whole bunch

  • steve

    you will find that online ordering has assisted in slowing the postal service down--there is not even an option listed on most websiteds that allow you to ship by the postal service. it is either fed ex or ups.

    • Wowbagger

      Really recently there has been a resurgence in shipping using the postal service. I now receive a lot of mail shipments.

      Also, it is easier to use their flat rate boxes, print your own postage at usps.com, stick it on, and drop the box at the post office than to drive to a UPS pickup location.

      FEDEX in the Clarksburg area is so lousy I wouldn't consider them.

  • jay zoom

    one more request on a different note whats your take on the mountaineers recruiting class for 2013 and where were the ranked nationally as well I know they were ranked 5th in the big 12. thanks

  • jay zoom

    why would nick rahall make the statements he did. lets face it the usps gets no funding from the u.s. government they have to do something to make ends meet. if the jerks in washington are against this then fund the usps to a certain degree rather then send the money to some country overseas to bail them out who probably has no use for us anyway. lets say rahall runs a business that loses $500.000 dollars a year he'd close it in a heartbeat. lets the usps stop delivvery on saturdays keep the lobbies open for people at the local post office to pick their mail. ad be done with it. a for washington tell rahall to get get down to the business needed accomplished like pass a budget next time you talk to him. I have sent an email to the man also. thanks hoppy have a nice day