Corporations aren’t the problem for the Post Office, they’re the solution

By Tom Quiner

Protestors gathered in support of Saturday mail delivery here in Des Moines.

The Des Moines Register ran the story. It featured a protestor carrying a placard which said:

“Stop corporate mailers’ subsidies.”

Why are corporations always blamed for everything? They are not the issue when it comes to the fiscal problems of the U.S. Postal Service. In fact, corporate mailers have helped to keep the Post Office afloat.

For the record, they do not receive subsidies; they receive discounts for quantity purchases, a common business practice. Even more, they presort their own mail to earn additional discounts. In other words, they do some of the Post Office’s work in order to earn a better rate, a win-win for both parties.

The current postal mess has three root causes, all wrought by Congress.

1. Congress imposed unrealistic pre-funded health benefits for Postal employees.

They passed a bill called the Postal Accountability and Enhancement [PAE] law. The law mandates that the Post Office, unlike any other government agency or private business, pre-fund health benefits for their employees. As a result, the Post Office has had to pay $21 billion over the past four years to fund the health benefits of future retirees.

It seems that Congress was being a little over zealous to ensure that postal workers pensions were secure.  As the Postmaster General, Patrick R. Donahoe, explains:

“Unlike other American businesses, the Postal Service must pay cash today for health benefits that will not be paid out until a date far in the future. Other federal agencies and most private-sector companies use a “pay-as-you-go” system, paying premiums as they are billed.”

2. Congress wouldn’t allow the Post Office to close unprofitable offices.

In response to the PAE law, the Post Office naturally looked to cut costs, and closing under-utilized offices in rural areas with low mail volume seemed like a logical place to start.

Congress wouldn’t let them do it. Why? Because they received too much heat from rural voters who didn’t want to give up their local Post Office. They blocked this cost-cutting measure, which necessitated the Post Office’s last option, to cut back Saturday mail delivery.

3. The Post Office is prevented by law from earning a profit, since it is an independent agency of the federal government. Profits are used to innovate and compete, such as we have seen with Federal Express and UPS.

Unlike Federal Express and UPS, who have to be responsive to their customers, the Post Office is a pawn to Congressional political pressure, and must be responsive to them, not their customers.

If the Post Office were privatized and turned into a private corporation, perhaps they could better compete freed of their masters in Washington.