Signed, Sealed, Delivered… and Broke

February 7, 2013

In 1960 the price of a stamp was 4 cents (31 cents today); today that same stamp costs 46 cents and pays for a consistently diminishing number of services.  Enter today’s surprising twist in the Postal Service’s unspectacular saga: new cuts to Saturday mail delivery.

The United States Postal Service (USPS) has been plagued by inefficiency for years. Last November the government conservatory reported record losses of $15.9 billion, which tripled losses from the year before.  In fact, the USPS spends about $25 million more a day than it takes in and has exhausted its borrowing capabilities.

Economists and scholars alike have sounded the alarm to reform government and entitlement programs for years, including the ailing postal service.

In 1999, Thomas Duesterberg of the Hudson Institute noted that while the price of a long-distance phone call has fallen in the past 30 years, the price of a first-class stamp has soared. Others have urged the USPS to become privatized in order to mitigate loses and improve efficiency.

Congress, however, has turned a blind eye to the poorly run mail-carrying monopoly, just as they’ve ignored tackling other broken systems like Social Security and Medicare. Rather than finding real solutions for the USPS, Congress, always in character, simply imposes costly regulations with one hand while planning to bail out the USPS with the other when it fails to meet those obligations.

Essentially the government has acted as an exhausted parent, simply giving their misbehaving teenager money and carkeys to get them out of their hair.

Despite teetering on the brink of collapse for years, the entity continues to bleed money while still giving employees raises and bonuses. In fact, the same week that the USPS announced a record  profit loss in November of 2012, all but one of their top executives received a pay raise.

If the government can mismanage something as simple as mail delivery, one can only imagine how poorly entitlements are likely to be handled and how costly the day of reckoning for those programs will be. Today we’ve cut mail delivery on Saturday.  Tomorrow will we cut Medicaid doctor visits on Friday?

One component of the problem lies with a law passed in 2006 requiring the agency pay at least $5.5 billion per year into a retiree health benefit fund, which accounts for most of the Postal Service’s losses. At the same time that the government singled out the USPS for their costly heath care fund, they also stood in the way of allowing reforms that would help it cut costs, like changes to service and a reduction in the annual health fund payment. The ill-timed law, coupled with the loss of revenue from the Internet are part of myriad of reasons the post office is continually  in the red.

Of course the cut in service will affect average Americans the most, whether it be the mother who works throughout the week and can only make it to the post office on Saturdays, or the army solider on base who must wait an extra day for letters from home.

It seems as though the story of one of the few government agencies explicitly authorized by the Constitution is a tragedy after all. Riddled with debt and bogged down by regulation, the USPS has almost entirely stagnated due to Congress’s inability to react to ever-changing market conditions. The first postmaster general, Benjamin Franklin, would indeed be thoroughly disappointed.

Some would urge you to write letters to your representatives in Washington to warn them of their mistakes and to push for reform, but these days, who knows if they’d ever even get it?

Tags:, , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *