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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsGutting the Postal Service.
James Royal recently published an article at Motley Fool evaluating the Postal Service as a business. Link: http://www.fool.com/investing/general/2013/03/04/how-the-postal-service-is-being-gutted.aspx
The title of the article is "How the Postal Service is Being Gutted" and draws the conclusion that "...the postal service is a fundamentally sound business, though not without its challenges. If you look closely, you'll see a concerted campaign to drive USPS out of business..."
Royal outlines three myths about the Postal Service. The first myth is that recent losses demonstrate that USPS is not a viable business. Royal notes that the majority of the red ink is the result of the healthcare pre-funding mandate imposed by the lame-duck Republican Congress in 2006. The pre-funding mandate requires the Postal Service to pay for 75 years of future employee health care benefits in a 10 year period. This onerous requirement means that the Postal Service is currently paying for future health benefits for employees who have not been hired yet and, in many cases, not born yet. Despite this burden, credit needs to be given where credit is due:
As if the pre-funding mandate were not a sufficient burden, the Postal Service is also restricted to investing those funds in low-yield Treasury bonds. This forces the Postal Service to save even more now than a private company would to obtain the same payout later.
The second myth that the article examines is "snail mail is dead." The article points out that, even though letter mail volume is declining due to replacement by e-mail, the larger problem is that, at 46 cents, first class mail is grossly underpriced compared to European services which are priced closer to $1 for a letter. Though the article doesn't mention the fact, European postal services tend to be more privatized than their American counterpart. FedEx and UPS provide no comparable service at anything close to the same price. Another area in which USPS provides underpriced service is pre-sorted bulk mail. Bulk mailers get discounts for pre-sorting mail that exceed the cost-savings to the Postal Service.
One barrier to proper pricing is that price increases are overseen by a separate agency, the Postal Regulatory Commission, and are restricted to increasing no more than the general rate of inflation. If costs exceed the inflation rate during a given period, they can not be recovered.
In addition to saddling the Postal Service with the suffocating health care pre-funding mandate and preventing it from properly pricing its products, Congress has also prevented the USPS from increasing revenue by expanding its services into related lines. While our representatives exhort the Postal Service to operate like a business on the one hand, on the other they also say that USPS can not "unfairly" compete with private companies. Recent restrictions include: implementation of an online payment system in 2000 (internet companies complained); putting public copy machines in Post Office lobbies; selling phone cards; and selling postage meter cartridges (Pitney Bowes objected). "And, of course, rivals such as UPS complained, ultimately leading Congress in 2006 to restrict USPS to mail delivery."
The third myth examined is that "privatized mail delivery would be cheaper and more effective." The article points out that in 2011, USPS delivered more than 30% of FedEx Ground's packages. FedEx uses the Postal Service because it is cheaper. Another way the Postal Service is forced to operate at a handicap is by preventing it from negotiating volume discounts with large parcel shippers. And then there's this:
The article concludes by suggesting that the only sensible reason for handicapping the Postal Service in this fashion is to set it up for "failure" and subsequent privatization. The Cato Institute, which was founded by Charles Koch, has been advocating for this outcome for decades. FedEx founder and CEO Frederick Smith has served on the Board at the Cato Institute and FedEx continues to help fund the think tank.
Royal points out "two plums" that can be plucked from a privatized Postal Service. One would be "busting the union, lowering wages, and shifting that profit into investors' hands..." And the other:
I have been following the Postal Service's plight for many years and have explained the financial squeeze imposed by Congress to numerous people. In doing so I have witnessed a curious phenomenon. When I explain the health care pre-funding mandate people suddenly appear almost disoriented. Not a minute later they often refer to it as "pension pre-funding" and I have to correct them. "The pensions are fully funded. The pensions are actually overfunded. The pre-funding mandate covers future health care premiums..." People need to be told twice- and then their jaw drops...
I think people resist understanding the truth about the mandate because the truth is- it is blatantly abusive. Nobody wants to examine what else is hiding underneath that rock. If Congress will sabotage the Postal Service, what else might they be capable of doing? Is the handling of the Postal Service an anomaly or a template? They also have Social Security, Medicare, and Medicaid in their hands...
NALC (the carriers' union) is sponsoring a national day of action to mobilize public support on March 24. Details here: http://www.nalc.org/
Highly recommended site for information on USPS: http://www.savethepostoffice.com/
Teamster Jeff
(1,598 posts)duffyduff
(3,251 posts)The Cato Institute lies about everything in order to further a crackpot ideology and to further enrich the Kochs who don't want to pay taxes for anything.
I love my post office. Digital everything is highly overrated.
Buns_of_Fire
(17,151 posts)Long gone are the days when "I guess the check got lost in the mail" was an excuse. These guys are good, and a lot more reliable than any other service I've used in the past. Cheaper, too.
Which, I guess, is why republicans want to hobble it. They can't bear to see a (quasi-)governmental agency do a better job than one of their precious corporations.
Omaha Steve
(99,493 posts)There is nothing like a lame duck 2006 R Congress breaking the largest unions in the country.
OS
KoKo
(84,711 posts)hay rick
(7,587 posts)The connection between Fred W. Smith, CEO of FedEx and the Cato Institute, which has been pushing for postal privatization, is mentioned above. More on Mr. Smith:
The Postal Service's largest vendor: FedEx.
Unlike USPS and UPS, FedEx is regulated by the Railway Labor Act, making union organizing much more difficult.
The crippling health care pre-funding mandate was contained in the Postal Accountability and Enhancement Act of 2006 which was signed into law by George W. Bush. Bush and Smith were fraternity brothers at Yale and both were also members of Skull and Bones.
From Smith's Wikipedia biography:
The same evening of his forgery indictment Smith was involved in a fatal hit and run whereby he killed a 54 year old black handyman named George C. Strughill. Smith was arrested and charged with leaving the scene of an accident and driving with an expired license. He was released on a $250 dollar bond.
This was not the first time Smith was involved in a fatal car accident. During his first summer break from Yale, Smith was back in Memphis driving out to a lake with friends when he lost control of the car he was driving causing the vehicle to flip killing the passenger in the front seat. The cause of the accident was never determined.
Hayabusa
(2,135 posts)Hurt my foot a little on the kick, though...