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.