published Thursday, September 8th, 2011

Postal Service seeks aid amid huge losses

Americans are accustomed to receiving traditional mail fairly efficiently -- without undue delay and at not too high a cost -- via the U.S. Postal Service.

But that service is threatened by massive financial losses at the Postal Service. The agency expects to have almost a $10 billion deficit this fiscal year and might run completely out of money within months.

What happened?

Well, a lot of things, but one of the biggest issues is email. Tens of millions of Americans and U.S. businesses are simply not using the Postal Service nearly as much as they used to, because they can send so much of their correspondence via computer with email. It saves them a great deal of time and money.

But at the same time, the huge drop in the use of traditional mail has helped generate correspondingly huge deficits at the Postal Service.

Now, the Postal Service is nearing default on billions of dollars it owes to finance its retirees' health coverage.

Not surprisingly, the agency is pleading its case with Washington for aid, and the Obama administration appears inclined to try to provide assistance of some type. The administration has proposed giving the Postal Service an extra three months to make a $5.5 billion payment that is due at the end of this month. It also has said it will come up with a plan to "stabilize" the Postal Service, The New York Times reported.

Meanwhile, Postmaster General Patrick Donahoe has suggested closing thousands of little-used post offices around the country and laying off 120,000 employees. The trouble is, the Postal Service is constrained by labor contracts that make it hard to lay off workers.

There is no easy solution to the Postal Service's problems. Many Americans still rely on the agency for mail delivery and don't want the number of delivery days reduced. Stamp price increases big enough to cover a significant portion of the current losses would drive away customers. And certainly taxpayers should not be put on the hook for any sort of bailout. (Bizarrely, U.S. Sen. Claire McCaskill, D-Mo., suggests the Postal Service could generate revenue by having a big ad campaign urging people to write more letters.)

It seems obvious that at least part of the solution is to close under-used post offices, relax union rules that block layoffs of workers who are not needed, and otherwise economize so that the size of the Postal Service matches our country's actual need for it. That would be painful, but the federal government should not shield the Postal Service from the market forces that affect private companies.

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nucanuck said...

Cut regular delivery to three days a week while keeping and enhancing next day and special services.

Rather than eliminate small town service, encorporate it with a village store, paying the owner a small amount for handling the mail and managing the PO boxes.

Common sense sollutions.

( Of course all the above will cut lots of jobs)

September 8, 2011 at 1:56 a.m.
EaTn said...

Agree that PO should streamline, but in the middle of huge national unemployment do we add more fuel to the fire? For now they should put in a timeline cost cutting proposal so that folks can see light at the end of the tunnel.

September 8, 2011 at 6:15 a.m.
fairmon said...


I agree and have suggested to my congressman three days a week delivery and utilizing banks in those areas where there is a need to close a post office. Every little post office doesn't need a post master general but most do have one. The compensation of postal employees and the private operations should be comparable.

Unions outside the public sector are fine but I am opposed to any government entity being union which is opposite of what the POTUS is promoting. There should be one guiding principle for government employees which is they will be compensated in the upper 1/4 percentile of those doing like work in the private sector adjusted for each labor supply area in which the government employee works.

September 8, 2011 at 9:10 a.m.
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