FOR ANYONE who still does not quite grasp the technologically obsolescent U.S. Postal Service’s calamitous financial situation, here are a few facts from Thursday’s Government Accountability Office report.
First-class mail, the source of half of USPS’s revenue, has declined from 104 billion pieces per year to 74 billion pieces over the last decade. Estimates are that volume will shrink by 34 billion more pieces by 2020. Meanwhile, the postal service calculates that almost half of its 461 mail-processing facilities are redundant. The USPS’s $25 billion in losses over the last five fiscal years have left it within $2 billion of exhausting its $15 billion line of credit with the U.S. Treasury, which is the only thing standing between the postal service and total collapse.
In February, USPS projected that annual losses would rise to $21 billion by 2016 and proposed a plan to cut costs by an offsetting amount. This would involve dramatic reductions in the USPS infrastructure and workforce. But there appears to be no alternative. “The Postmaster General has stated that maintaining a vast national postal infrastructure is no longer realistic,” the GAO notes.
If the postal service were a private company, its shareholders would be clamoring for it to get on with the restructuring, pronto. But USPS answers to Congress, which gets lobbied by “stakeholders” – i.e., special-interest groups – that benefit from the status quo. And so, as the GAO report points out, “stakeholder issues” stand in the way of necessary action.
Business mailers fret that eliminating mail processing centers could raise their costs; ditto various publishers. The fact that, without reform, the costs would get shifted to someone else, quite possibly taxpayers, seems not to trouble them. Postal unions cling to contracts that require only modest employee contributions to health care, make it essentially impossible to lay off many workers and forbid transferring employees to new jobs more than 50 miles away. Last, but not least, members of Congress defend their districts’ postal facilities, no matter how underutilized or inefficient.
For years Congress has kicked this particular can down the road, but time is running out. USPS agreed last December to postpone closing facilitiesuntil May 15, pending legislation to resolve its crisis. There are two competing bills, one in the Senate and one in the House. The Senate bill would shrink the workforce by up to 100,000 through $7 billion in early retirement packages but is otherwise tepid. For example, it would require the postal service to consider downsizing installations before closing them.
The House bill is much more realistic: It would overcome political resistance to closing facilities by appointing a commission similar to the one that trimmed excess defense installations, allow USPS to move more quickly to five-day delivery and bar no-layoff clauses in labor agreements.
For better or worse, our children’s children will marvel at the fact that anyone ever used to send the paper thing called “a letter.” They’ll be amazed to learn that we unnecessarily spent billions of dollars propping up a huge, inefficient system for moving those things around. But what would really astound future generations is that we borrowed that money and left it to them to pay it back.