Postal Serve -- Time for Reform

I dropped a couple of letters from the name because the only way the Postal Service can survive to serve is trim its scope and hollow its core.

While the American Postal Workers Union (APWU) blithely advertises the Postal Service doesn't cost you the taxpayer a single dime ....

This APWU TV ad aired on NBC, CNN, MSNBC and Fox beginning July 8. 

..... the Postal Service is broken and broke.

The Postal Service ran up losses of $15.9 billion in 2012, $5.1 billion in 2011, and $8.5 billion in 2010.  Through 2012 total Postal Service losses accumulated to $38 billion.  If the Postal Service were put into bankruptcy today the process would be tasked with resolving debts twice the size of the mountain of debt Detroit brought into its bankruptcy filing.  The Postal Service has been able to pay bills and remain a going concern for the last several years only because Congress has passed emergency, kick-the-can-down-the-road legislation, permitting the Postal Service to welsh on its payment into the Federal Treasury -- payments that fund Postal Service employee and retiree health care benefits, pensions and workers' compensation claims. With its diminishing revenue stream, the Postal Service will never be able to make these payments; thus the APWU claim of no taxpayer funding is a joke, or to use Barack Obama's terminology, phony.

The Postal is confronted with a
permanently declining revenue trend.

The Postal Service's financial collapse isn't so much a question of mismanagement and inefficiency as it is a consequence of an outdated, sclerotic business model imposed on it by the Congress. That model worked, even thrived, during the first 30 years (1971-2001) of the Postal Service's existence as an independent (as in rate payer funded) agency when consistent economic growth, technological breakthroughs in database management and mail marketing, lifestyle changes, and deregulation and innovation in the financial, telecommunications and media sectors of the economy drove strong mail volume and revenue growth. But the mail volume growth curve weakened at the turn of the century, then stalled and stopped entering the Great Recession, when financially lucrative First-Class volumes plummeted, never to return. While the economy was the catalyst, the ultimate disposition of mail based transactions and messages was to the internet. Most of us, for most of that, don't need the mails anymore.

For its long term survival and ability to serve, the Postal Service needs to wrest tens of billions of dollars out of its cost structure. The volume and revenue to support the Postal Service as we know it simply are no longer there.

The Postal Service is in an all of the above kind of situation, the most important items of which are listed below.

• Six day a week delivery must go.  While 5-day delivery plans have been put on the table, ultimately there need only be 3. These days, anything that is so time-sensitive that you can't wait a day or two for it comes via email, express, or expedited delivery services. The every day, grind it out postal delivery model is needed no more.

Collection boxes are not the only
things that need to be surplussed.

• Those who receive door delivery need to join the rest of us (most of the population) who receive our mail curbside or at some sort of centralized delivery receptacle. The labor intensity of door delivery is insupportable by declining postal revenues.

• Thousands of small stations, branches and post offices need to go. While many of their patrons claim the social fabric of their community will be torn by closure, the real agenda mostly is to support keeping in their communities the very high paying jobs that the postal system can no longer afford.

• Postal Service management needs to get new tools to negotiate agreements and compensation structures with postal labor. Currently, third party arbitrators are authorized to impose labor contracts on the postal system with little or no regard or economic consequence. One of the consequences of this extraordinary circumstance is large portions of the postal labor force are compensated significantly more than counterparts at FedEx and UPS. The resulting artificially high cost structure makes it impossible for the Postal Service to compete for most of the package delivery market, which costs the postal system revenue that  could help support the Postal Service's infrastructure.

• The Postal Service pension and post retirement health benefit systems and their funding must be reformed. While most of the public discussion on these issues has focused on funding mechanisms, the basic obligations are too expensive for the Postal Service to afford going forward. The postal unions exaggerate by a factor of two or three the annual savings that will result from legitimate pension and health benefit reform. Retirement programs are not the only problem, not by a long shot. 

• And yes, postal rates need to rise, for many services significantly. The big users of the postal system are big business -- big banks, big mail order companies, big telecommunication firms and big publishers.  They have used their insider status and political influence to put restrictive and financially draining caps on postal rates.  It's time for big business rate caps to come to an end.  Otherwise our children and grandchildren will end up paying the bill through postal-sourced accretions to the burgeoning federal debt bomb.  

There is much to do.  Congress needs to get on with it.

Here in Montana we are part of the problem instead of part of the solution, thanks most obviously to Senator Jon Tester. Earlier this year Tester stood in the way of postal reform by invoking the constitutional right to mail delivery. Tester said, "It's in the Constitution that we have to have a Postal Service" which is, of course, an outright fabrication. This wasn't an off the cuff remark. Tester put it out in a press release. Tester's big idea for reducing the $10 billion gap is to get rid of a couple of part time members of the Postal Service's Board of Governors and to limit the Postmaster General's salary. This guy really believes his stuff.

Something has got to break, and for the sake of my children and grandchildren who otherwise will be paying today's outsize postal bills tomorrow, I would hope that what breaks is the Jon Tester, big labor and big mailer stranglehold on the outmoded and unsustainable, debt accumulating, postal business model. It is time to move truly forward.