Tuesday, August 14, 2012

"Neither Snow Nor Rain Nor Heat nor Red Ink

. . . stay these couriers from the swift completion of their appointed rounds." For now, at least. But the future of the United States Postal Service is in serious doubt. Competition from private couriers like FedEx and UPS, along with instantaneous communications on the internet have severely damaged the underlying purposes of what used to be called The Post Office. And they don't even have an official motto as they sink slowly into the west.

What most people think of as the Post Office motto (above) is actually simply what the architects had chiseled on the post office at 8th Avenue and 33rd Streets in New York City. Even its other famous office in New York has had its name hijacked by trains. Grand Central Station is the post office, and the train station is properly called Grand Central Terminal. Yet when tourists ask “which way to Grand Central Station?” they aren't usually looking for a post office.

Despite raising postal rates and sucking up more federal funds, the Post Office is currently losing an average of $42,335,766 per day over the fiscal year. In the third fiscal quarter of 2012 it lost $5.2 billion. For that quarter, the loss is $57,142,857 per day. In one of its brilliant “fiscal restraint” moves, the Congress passed legislation ordering the Postal Service to use $3.1 billion of its income to “prefund” postal employee retiree health benefits.

Not surprisingly, that public employee scheme hasn't worked too well. On August 1, Postmaster General and CEO Patrick Donahoe reported that the USPS was forced to default on a previous prefunding plan for retirees totaling $5.5 billion. $5.3 billion, plus the $3.1 billion coming up in September. And there are zero cash reserves to cover those mandates. And before anybody corrects me, the USPS is styled a private corporation. That was originally done to enhance the possibilities of the Post Office becoming both more competitive and more profitable. It is an “independent establishment” within the executive branch, whatever that means. But with the federal government's rules, interference, and safety-net funding, it is a public entity in all but name.

Donahoe has said that he and his executives are doing everything they know to get the post office back on target. But, “it is still expecting Congress to pass legislation that will ease the pressure.” And what legislation might that be? Says Donahoe: “We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability (emphasis added). We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers' changing needs.”

One clear way to improve service and cut costs is to eliminate duplication of effort and get rid of the outrageous retirement and health benefits which postal employees share with other full-fledged federal employees. Donahoe is also asking the Department of the Treasury to return $11 billion dollars in overpaid “prefunded” retirement benefits to shore up its operations and bring retirement and health benefits in line with the private sector. Good luck with that. He also proposed to cut the six-day delivery schedule to five, saving $2.7 billion per year. Most of us could live with that.

I live in a very rural part of the California high desert. I live too far out to get mail at my door, so my mailbox is in a bank of boxes about two miles from my house. That's a little inconvenient but not awful. But they are small boxes. If a large package won't fit in the regular box or the slightly-larger “big package” lock box, I have to travel thirty-five minutes one-way on winding mountain roads to the Caliente Post Office to pick up the package. Ditto for certified or registered mail. The least they could do is put a gas station next door, but the closest one is another twenty minutes away in Bakersfield.

But somehow, FedEx and UPS can come right to my door with a package of any size. A “letter” sent via those services is a little more expensive than by USPS, but package prices are comparable, and FedEx and UPS have to make a profit or go out of business. Somehow, I don't think the woes of the USPS are any different from those of the private services. But the USPS is used to being treated with kid gloves, enjoying all the protections of private business along with all the advantages of being a federal agency. At times, the whole mess makes me want to go postal.

The post office in the illustration (above) is my “local” Caliente Post Office. It closes at 3 PM Monday through Friday, as well as closing for an hour for lunch during the day. It is closed on Saturdays.

24 comments:

Joel Farnham said...

LawHawk,

I think they should have broken up the USPS a long time ago. Sold off the parts to competing interests. It is a monopoly that has outlasted it's usefulness.

If I remember correctly the Postal Service was modeled after the Roman Postal Service. At least that is where the idea came from. Ben Franklin ran it and I think was mostly responsible for it's initial design.

K said...

The USPS serves a very useful purpose and should not be shut down.

Whenever there's a new progressive program to say, nationalize our health system or large industries, we can always point to the post office and say - is this how you want to be serviced in a hospital? When you got home you'd have been folded spindled and mutilated. And what if your car were built by the USPS? It might run under any weather conditions but would have a max speed of 10mph and smell like cheap cleaning solvent.

Being able to point this out has saved our country an uncountable amount of treasure and freedom. The USPS is, therefore, well worth keeping around.

Tennessee Jed said...

I agree with K's point. It is a wonderful example of government bureaucracy, and how without competition, institutions become flabby, expensive, and political.

tryanmax said...

K, you give me a brilliant idea. As a cost-cutting measure *snark* I think the USPS and the DMV should be merged.

LawHawkRFD said...

Joel: The sad part is that as bad as it has become, the USPS is still one of the best postal systems in the world. It simply seems that it has become redundant, and as that has happened, it has become another huge drain on the economy.

LawHawkRFD said...

K: Twisted thinking, but I like it. LOL

LawHawkRFD said...

Tennessee: Like all federal bureaucracies, the USPS is a beacon of inefficiency and bloated employee benefits. Once we turn the economy around, we'll be able to afford to keep one big federal bureaucracy that we can point to as what can happen if we don't learn our lessons. The USPS is the best choice, since compared to other federal agencies, it's relatively benign and does serve a non-intrusive purpose.

T-Rav said...

I don't want to see the post office broken up, if for no other reason than that they provide a center of gravity for many rural communities. But to preserve that, they need to be reformed, and badly.

LawHawkRFD said...

tryanmax: As for combining the USPS and DMV, I have an objection on 10th Amendment grounds. We need to keep the DMV free and independent so that we'll have a state bureaucracy to point to (at?) as well.

AndrewPrice said...

I really like the post office. I think they do a great job and they serve a great purpose. Neither UPS nor FedEx has the infrastructure to deliver mail to every home either, and not for less that many dollars per letter.

Also, having dealt with them professionally, I can tell you that they are very well run. The problem is the rules imposed by Congress.

LawHawkRFD said...

T-Rav: I'm laughing and agreeing with you at the same time. Click on the picture to enlarge it, and you'll see what I mean. That post office is not only the largest building in Caliente, it is the only non-residential building in Caliente.

My house is the last one on the fringe that receives UPS and FedEx packages. When I attempted to send a gift to my younger daughter a couple years ago from San Francisco, I was amazed to find out that neither UPS nor FedEx had any record of her address or the existence of those homes near her house. Those homes are closer to the Sequoia National Forest than mine. So I had to send the package by US Mail. Her mailbox is in the bank of boxes right next to mine.

So I guess LawHawkRFD is, in its own way, a plea to retain rural services.

LawHawkRFD said...

Andrew: A few exceptions to the contrary notwithstanding, I agree. The deficits are almost entirely due to Congressional and executive meddling and the ubiquitous public employees retirement benefits. The picture many of us have in our minds of the surly postal employees and long lines are really remnants of the days before UPS and Fed Ex. Each has a niche, and it's proof that even limited competition has a salutary effect on institutions.

It looks like we're developing a consensus that particularly for rural or restricted areas, the USPS will continue to be a necessary delivery service for many years to come. Even if I do have to go to the Caliente Post Office to pick up an oversized package, it's more like visiting a neighbor than going to a faceless federal bureaucrat. The postmaster (and one of three employees) knows everybody by name, and I've actually seen more of him than I have of my close neighbors.

Kit said...

"I live in a very rural part of the California high desert. I live too far out to get mail at my door, so my mailbox is in a bank of boxes about two miles from my house. That's a little inconvenient but not awful. But they are small boxes. If a large package won't fit in the regular box or the slightly-larger “big package” lock box, I have to travel thirty-five minutes one-way on winding mountain roads to the Caliente Post Office to pick up the package. Ditto for certified or registered mail. The least they could do is put a gas station next door, but the closest one is another twenty minutes away in Bakersfield.

But somehow, FedEx and UPS can come right to my door with a package of any size. A “letter” sent via those services is a little more expensive than by USPS, but package prices are comparable, and FedEx and UPS have to make a profit or go out of business. Somehow, I don't think the woes of the USPS are any different from those of the private services. But the USPS is used to being treated with kid gloves, enjoying all the protections of private business along with all the advantages of being a federal agency. At times, the whole mess makes me want to go postal."

Those two paragraphs perfectly illustrated the difference between government funded service and privately-owned service.

LawHawkRFD said...

Kit: As several of us noted above, the Post Office has its place. Reforms are necessary (pensions and benefits particularly), but overall, it provides services that UPS and FedEx right now don't provide. But if it is going to continue to exist, it's going to have to find its own niche and do it efficiently and not as a burden to taxpayers. Competition may turn out to be the best thing that ever happened to the USPS.

Kit said...

LawHawk,

I actually agree. With all you said.

LawHawkRFD said...

Kit: As I mentioned above, we all seem to be forming a consensus that the USPS needs some reform, but isn't ready for the ash can yet.

Individualist said...

Create a contract for every zip code and put it out for bid either Fed ex or UPS or whoever. Either give exclusive rights or allow customers to choose the provider.

Let them go to eNotifications for certain mail as well to reduce volume.

No need for there to be a Post Office anymore, they don't even have a monopoly.

The Postal Service can then be limited to government fucntions. Mail fraud, teh census etc.

LawHawkRFD said...

Indi: If the private companies thought that exclusive delivery to places with rural or restricted zip codes were economically viable, it's likely they would already have tried to do it. The federal restriction on mail delivery (not package delivery) was removed years ago. Both major private services use "zones" to determine how much a letter/package will cost. If given the choice of paying $.45 for a first class stamp or having to find a UPS/FedEx location and paying $1.50+ for a simple letter, most people will choose the stamp. In addition, you can't send a package by e-mail, but you can send a letter, so letters standing by themselves are not particularly attractive as part of a private business plan.

The lack of a monopoly is actually the strength of the concept of retaining the USPS in a leaner, meaner version. The USPS can continue to serve its basic purpose--sending letters anywhere, anytime for a minimal fee.

No post office, no mail fraud. The FBI and other agencies would be available (and already are) to investigate fraud being committed by those using written communications. Eliminating the underlying purpose of the USPS while retaining its power to investigate fraud would be more federal duplication of effort. The same would be true of the census. If private companies can deliver letters, they can deliver the census documents. I think an opt in/opt out plan would simply be unworkable.

Eliminating the broad basic purpose of the USPS/Post Office sounds a little like throwing the baby out with the bath water.

USS Ben USN (Ret) said...

Nice post, LawHawk!

The benefits package for postal workers is certainly better than the military's.
I'm not against benefits, but the USPS benefits have become very bloated and needs trimming.

Another problem, and this holds true with Amtrack as well, is there are never any consequences when there is bad management or, as Andrew mentioned, the stupid rules imposed by Congress (offhand, I don't know what those rules are, but there's obvciously a need to improve them or get rid of the stupid ones).

I concur, due to the infrastructure, we still need them, and based on all the other waste, dumb regs, etc., going on in govt. agencies, the USPS annual loss is probably the least of our worries, but every wasted billion counts.

It shouldn't be all that difficult to fix, however.

BTW, we live in the sticks also, but we have a mailbox about a tenth of a mile away.
The post office used to deliver packages to our house but they no longer do so.

The reason given: "for safety reasons." I'm not sure if that's a countrywide policy or not, but after receiving packages for 20 years and now having to drive 30 miles, roundtrip to town to get them, that sucks.

I can understand the safety concerns in certain circumstances (big, aggressive dogs running around freely, meth labs, devil's weed growers, etc.), but there has never been an incident in our neck of the woods (hood).

Individualist said...

Lawhawk

The PostMaster General has an office dedicated to mail fraud and identity theft. When I was teh victim of ID theft because someone stole my mail to get information this was teh only agency to investigate. Those functions can be left in place.

Mail can be easily transcribed to PDF docs or scanned and a Post Office/UPS/FEDEx could offer this service. Even better someone could scan or create a letter from a computer and it could be sent to a postal location and printed there eliminating the need for delivery. This could defer the cost. The recevier of the document might not even know the difference or care.

Everything the Post Office does can be put out through contract even running of the Post office that is there. If an offset to cost needs to be placed the governement can handle that by giving a lump sum payment to the provider.

By privatizing in this fashion the managerail responsibilities are no linger the government's concern including the salaries and pensions of the employees.

Honestly the govrnment does not need to be handling this and evidently it can't afford to anymore.

LawHawkRFD said...

USSBen: The new Postmaster General (CEO) of the USPS has done a yeoman's job of trying to make the service more efficient. But he can't do it alone. He needs Congress to get its act together and the executive branch to offer him support in his efforts. Those pensions, retirement and health care mandates are making it impossible for the service to tighten its belt and get on with streamlining its operations.

BTW, the same thing happened here that happened in your neighborhood. I wondered after I first moved here why each of the older houses still had their own mailboxes. They're remnants or artifacts. The central pickup mailboxes were put in place using the same logic you described a few years before I moved here. There are outgoing mail slots for each bank of boxes, but they will only accept letter-size mail. If you want to mail a package, it's off to the Caliente Post Office.

LawHawkRFD said...

Indi: OK, but it still doesn't tell me why it's necessary to have both the Post Office and the FBI investigating mail fraud. If we were to get rid of the USPS, it would be best to get rid of it entirely and eliminate duplication of effort and responsibilities.

You may also find this hard to believe in 2012, but there are still many people in rural areas who don't have or don't want internet service. They wouldn't know an e-mail from a pdf file. I don't see your solution as being entirely unfeasible, but I don't see it as a practical solution either. At least for now--maybe later.

Individualist said...

Lawhawk

They don't need internet so long as the Post Office has it. Many people in rural areas have mailboxes in the Post Office and woudl have to go there anyways.

You can use a computer there or scan the documents and instead of the letter being physically delivered a copy is printed at the destination and then mailed. That has got to be less than 1/5 th cost of physical delivery.

Even then all the services the Post Office offers can be handlede by a private company. This is how they should have set the TSA up but didn't and look where we are now, one million crotch gropes later.

LawHawkRFD said...

Indi: I don't think USSBen and I are atypical. I don't have post office box, and speaking for myself, I will avoid spending the $25 - $30 on gas and wear and tear on my vehicle at nearly all costs. Your proposal decreases the post office's costs while grossly increasing mine. With the current system, the ease of delivering mail in urban and suburban areas means that the cost of my rural delivery can be offset by a more profitable division. The private companies simply wouldn't want to work on such narrow profit margins. I'm afraid Rural Free Delivery would quickly become Rural No Delivery.

There's no question in my mind that the other services can perform the services, I just question whether they would be willing to do so, given the economics of it all.

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