THE U.S. POSTAL SERVICE (USPS) faces a financial death spiral. Burdened by excess infrastructure, outmoded regulations and high labor costs — not to mention facing digital-age obsolescence — USPS posted an operating loss of $15.9 billion in fiscal 2012 and is on course to lose an estimated $7.9 billion in fiscal 2013, according to President Obama’s newly issued budget.
Postal Service management has declared that, on “any rational analysis,” it cannot escape this predicament without curtailing Saturday delivery, which would save an estimated $2 billion per year. The Obama administration supports five-day delivery. A large majority of Americans tell pollsters they’re willing to sacrifice Saturday service.
Yet last week the Postal Service gave up on its plan to end Saturday mail delivery, citing congressional resistance. Rational analysis gets you only so far on Capitol Hill. What really counts is interest-group pressure. And the groups that live off the mail — advertisers, postal unions and paper companies, among others — put the squeeze on strategically positioned members of the House and Senate. They tucked a measure into a recently passed spending bill that was intended to deprive USPS of the legal authority to suspend Saturday delivery; after due consideration, the agency capitulated.
Now it’s anyone’s guess how USPS will avoid an expensive taxpayer bailout, given the agency’s well-founded forecasts that it will continue losing business to e-mail, text messaging and the like.
The Obama budget includes a plan that usefully advocates both an end to Saturday delivery and an above-inflation rate hike. In return, the administration offers the Postal Service a reduction in the current requirement that it pre-fund retiree health benefits.
The Obama plan would inject $30 billion into USPS, yet postal interest groups gave it a chilly response. The letter carriers’ union president griped that Mr. Obama did not eliminate the health care pre-funding entirely and said cutting Saturday delivery is “plain wrong.” A spokesman for the business-led Coalition for a 21st Century Postal Service decried the proposed rate increases.
Actually, despite its positive features, Mr. Obama’s plan is nowhere near the radical overhaul that USPS needs. Of the Postal Service’s $71 billion in projected costs for fiscal 2013, personnel pay and benefits accounts for $56 billion — 79 percent. Yet its 568,000 employees continue to enjoy a no-layoff clause and contribute less to their health-care benefits than do other federal employees. Labor arbitrators need not take the agency’s financial situation into account when deciding contract disputes. Congress continues to deny USPS the freedom to close unneeded post office and mail-sorting facilities.
In his budget, the president expressed the desire to “work with the Congress and postal stakeholders to secure ... necessary reforms.” Alas, the “stakeholders” — a.k.a. postal interest groups — are the problem. Unless and until their competing demands are changed, reconciled or overruled, Congress will remain deadlocked, postal reform will remain a non-starter, and billions of taxpayer dollars will remain at risk.