Screw up if you’re the Immigration & Naturalization Service and it’s curtains — as the House of Representatives showed one day last week with a 405-9 vote to split the INS in two.
Screw up if you’re the U.S. Postal Service and, well, you get to keep on doing whatever it is you’re doing that loses money.
Last year, despite a rate increase that raised $3 billion in new revenue, the USPS lost $1.7 billion. This year it expects to lose $2 billion. After all, it costs a lot to sponsor bicycle racing teams and stock all those post offices with the things you can get for less at Office Depot.
Thirty years ago, Congress removed the Post Office Department from the cabinet and made it into a quasi-independent agency with an appointed board of governors. Now and then it made money, but for the most part has been a steady loser. The political clout of the two big postal unions makes it almost impossible to trim the work force. At the same time, first-class mail volume continues to decline as e-mail traffic and overnight service by Federal Express and United Parcel Service grow.
Early in the life of the republic, Congress created the post office department and gave it a monopoly to carry the mail under the Private Express statutes. It made sense at the time. It helped unify the people of a fledgling nation and provided a universal service, the advantages of which outweighed the fact it lost money.
The Founding Fathers, of course, could not foresee a day when the likes of FedEx and UPS would circle the globe overnight with packages and letters. Neither could the post office. In recent years it has been playing a hopeless game of catch-up.
To preserve the first-class monopoly, the USPS pays FedEx to ship about three-and-a-half million pounds of its mail a year. Logic suggests that the same mail would cost us less if FedEx could cut out the middleman, the U.S. Postal Service. The USPS also hires outside contractors to deliver rural mail in many places.
Whenever proposals surface to remove the USPS’s monopoly, it raises a hoary argument: Private competitors will “skim the cream” of urban first-class mail, leaving rural communities in the lurch, or charging them outrageous fees. This rings hollow. My wife and I have a retreat in Northern California that is 55 miles south of the nearest FedEx station, over a strenuous mountain road, yet FedEx shows up once or twice a week with deliveries and will pick up packages to take back if alerted. The cost: about the same as sending a FedEx letter from Washington to California (the rural destination does require an extra day).
In early April, the USPS announced — trumpet fanfare! — a Transformation Plan. It would metamorphose into a “commercial government enterprise” with various streamlinings such as a rate increase this summer to 37 cents for a first-class letter. That would be the third rate increase in 18 months. Cheer up. To make up for the bad news the USPS is thinking of closing a lot of post offices and reducing the number of delivery days.
As for selling telephone cards, packing materials and postal memorabilia (which takes space as well as special personnel), the Postmaster General, John E. Potter, said, “What other entity in the world would have 38,000 mail outlets and limit themselves to selling stamps?” Well, Mr. Potter, if it limited itself to selling stamps quickly and efficiently, instead of requiring its captive customers to stand in long, slow lines, it might be a good deal more popular than it is.
The USPS is wobbling under a debt of $11.3 billion. In addition, it has pension liabilities of $32 billion and pays for health insurance for its retirees. The solution lies not in giving it crutches, but to go back to basics. Congress should cut it loose to compete in the market place. Let it raise capital. Give it modern mediation processes for labor disputes. And, no, all those postal workers will not be thrown out on the street if the USPS becomes a real business. A lot of them will still be working for it.
To give it a leg up, Congress might consider relieving it of its back debt and the health insurance costs of the current crop of retirees. Yes, we taxpayers will have to cover that, but we do it anyway in the form of unnecessarily expense service and regular rate increases.
If the postal service were out there competing, who knows, it might do what private businesses do all the time to increase market share, run sales. Imagine: “This week’s Special: a one-ounce First Class letter to anywhere in the U.S.A. for 25 cents. Delivered within four days or your money back.” Try that, and the customers will be breaking down post office doors to get in.