Even Warren Buffett and Bill Gates, working individually or together, probably couldn't make the United States Post Office a profitable enterprise given present circumstances. The agency's current business model -- the federal government mandates just about every aspect of its operations but provides no taxpayer funds for it -- is a prescription for disaster. It's hardly a surprise, then, that the postal service is struggling to stay afloat.
Some of the Post Office's problems are beyond its control. It can do little about email and the rise of private carriers that continue to erode volume, particularly in profitable first-class mail. It can only react. It has done so by closing post offices, by eliminating some processing and distribution centers and by workforce reductions. That's not solved the problem. The Post Office lost more than $8 billion last year. It is on track to lose more this year.
The situation is increasingly dire. Postmaster General Patrick Donahue appeared before a Senate committee earlier this month to plead for help and for much needed latitude to make changes to help the post office survive. He got a bit of relief in the form of postponement of an onerous $5.5 billion payment to the Treasury, but that's window dressing. Without changes in the 1971 rules that privatized the Post Office, the agency is unlikely to survive in its present form.
Indeed, another round of proposed cuts in staff and infrastructure -- including several postal stations and the processing center in Chattanooga and elsewhere in Tennessee and in Georgia -- is under study. Even if approved, those cuts won't help much. Neither will a proposal to reduce mail delivery to five days from six. Broader systemic changes are needed. Congress should make them, despite the sometimes significant political pressures to avoid doing so.
In the short-term that includes extending loan deadlines and providing funds to cover operating costs. The Obama administration correctly supports the latter. It also means addressing the requirement that the Post Office do what no other federal agency is asked to do -- prepay the medical costs of its retirees in advance. In the long-term, Congress should rescind the act that privatized the agency and restore taxpayer support.
The Post Office, after all, is a public agency authorized by the U.S. Constitution -- see Article 1, Section 8. It, like institutions as diverse as the military and Interstate highway system, provides an essential service. It keeps Americans -- all Americans -- connected.
That's something private enterprise does not do. Companies like UPS, Fed Ex and others have cherry-picked the best and most profitable parts of the mail and package delivery system. They do not serve every address in the nation, as the Post Office does. They candidly admit it is not profitable for them to do so.
Those who live in rural or isolated areas of the country deserve regular mail service. The Post Office currently provides it and should continue to do so even if it requires public funds to help underwrite the cost. Congress should provide that assistance as well as rule changes that will allow the postal service to adapt to an evolving marketplace. Those changes, to be sure, are likely to be painful in some ways, but they will help assure that the postal service remains viable.