Think Freely Media presents Common Sense with Paul Jacob

At some point approaching catastrophe, one has to stop offering googly sounds of uplift and hope, and just speak the truth.

Postmaster General Patrick Donahoe may understand that. The U.S. Post Office, he recently told the National Press Club, is “in a deep financial crisis because we have a business model that is tied to the past.” Deep ties to the past, indeed. Setting up a postal system was written into the Constitution.

Early in the system’s history, postal positions served as rewards to friends of successful politicians. This put a lot of bad apples into the cider; the business soured. Postage skyrocketed.

This sorry situation brought entrepreneurs into the market, delivering letters at a fraction of the government system’s prices. The politicians fought back, took the competitors to court, and won — on dubious Constitutional grounds.

But they did overhaul the system, reducing prices.

That was a long time ago. Today’s situation may be worse. As Donahoe put it, “We are expected to operate like a business but we do not have the flexibility to do so. Our business model is fundamentally inflexible.”

No surprise, Congress is inflexible. But there are competing bills rumbling around to allegedly fix the financial woes of the institution Donahoe calls “a national treasure.”

Well, if it’s a treasure, sell it off: The federal government could use the money. (Though likely not well.)

And the people could use a good privatized mail service. Or two. Or more.

This is Common Sense. I’m Paul Jacob.

By: Redactor

8 Comments

  1. LINDA SUNKLE-PIERUCKI says:

    Sorry, Paul-but you are dead wrong on this one. And no, I dont work for the Post Office-I am an elderly and disabled rural village resident about to lose her Post Office. Because of this, I’ve done a great deal of research on the issue (and I’m one of the few who is computer-literate here). About 90% of the Post Offices they want to close are towns exactly like this one-or even more isolated. We have no businesses left in town-what we have is mostly elderly and disabled residents who dont use computers (I think maybe five people in town have computers), dont get eBilling, pay bills with money orders and place catalog orders because many dont have transportation. We get prescriptions by mail, communications from Social Security, Medicare, Insurance companies, Unemployment commission, taxing authorities,Probate Court, etc-most are time-sensitive. The BS spouted by Donahue is half-truth: he wants to do away with Universal Service, particularly the Maximum Service to rural residents requirement in favor of bulk and direct mailers.There are no bulk mailers out here in fly-over country, BTW. And First-Class mail subsidizes bulk mail. We are NOT those computer-using folks who no longer use the postal service-we’re their biggest customers. And no private business wants to be saddled with rural delivery-they just want a lucrative transportation contract!

    USPS, with the help of Congress, has created their own monster: due to the way union contracts compute pay, larger post offices have steadily cannibalized smaller ones, taking their rural routes and nibbling at their zip codes-for a higher pay grade. Every time they have done this, transportation costs have gone up-but apparently USPS hasnt worried about that part of the cost. Routing is now so inefficient that they could easily save 25% by more efficient routing and putting those rural routes back where they belong-transportation is their second-highest budget item, after salaries. Unless the GAO and PRC get a handle on this problem, they will never solve the financial problems. Donahue’s solution (what he’s working toward) is to basically ‘part the UPSP out’ like a junk car! There’s some ‘crony corporate capitalism at work here-I can guess at the guilty parties, but cant prove it.

    USPS is SERVICE, NOT a business-and it is a service vital to keeping the rural elderly in their homes,providing the only non-electronic method of communication in a national emergency and a way for small business/cottage industries to stay in business for the small economic boost they give the community. We dont have banks, or shopping centers or grocery stores-many people arrange for someone to come and take them to a grocery store every couple of weeks or a doctor’s appointment. The Post Office is all we have-and if it’s gone,these small towns will finish dying rather quickly. I hardly call a 45-cent stamp ‘skyrocketing costs’ – most of us would gladly pay more to continue first-class mail service. Yet we are not allowed to do so-because the direct-mail industry has figured out that if they no longer have to serve rural areas, transportation costs-and their costs-will go down.They’re looking to lower their cost of doing business on the backs of the poor, weak and elderly. Once again, the elderly, voting citizens of the rural heartland are being screwed for the convenience and increased profits of the few big companies. There was a reason the Postal Service was written into the Constitution-we are the reason. Absolutely no one is interested in delivering first-class mail to rural areas for profit-because it will hardly be profitable (although these Post offices come closer to covering their actual costs than you are being led to believe). And some things cant be considered a business/profit model. Because the losses are actually minor compared to the size of the budget, simply re-organizing the system to be transportation-efficient would solve the problem for many years. Raising the price of the first-class stamp -or even doubling it-would further create excess profits. But dont ask rural elderly residents to give up the last entity that holds these communities together just to subsidize the direct-mail industry and a couple of huge trucking and air carriers. That’s just unconscionable!

  2. Michael says:

    I feel the pain Linda expressed. There are poor people all over this country. Poor people in the cities put up with the disadvantages of city living – crime, pollution, etc. They should not pay more tax so those living in the country get subsidized mail service. People living in the country have advantages – lower taxes, better scenery. Those advantages have a cost – more expensive transportation costs and more expensive mail. Linda may be correct when she says rural routes could be made better. A private entrepreneur will step in to make that improvement, and many others, as well. It is fiscally irresponsible for taxpayers to subsidize mail service for those who choose to live in the beautiful country – far from city crime and taxes.

  3. Jay says:

    I agree with Ms. LINDA SUNKLE-PIERUCKI .

    Fed Ex is great; but at some $7.00 and up- per mailing, cannot sue for everything.

    (And, I live in an urban area).

    The bulk mailers could cut their costs substantially, IF THEY WOULD ELIMINATE PEOPLE WHO DO NOT WANT THEIR MAGAZINES, CATALOGS, ETC.

    I, once (about 15 years ago) asked for ONE (1) ISSUE OF A FREE MAGAZINE, BECAUSE I NEEDED ONE ARTICLE. I have been getting it ever since. I NEVER FILL OUT THE CARD TO RENEW, but still keep getting it.

    About 25 or more years ago, I (on 2 or 3 occasions -living in another part of the country) bought from a mail order firm. Now, (starting about 2 or 3 years ago) they send me their catalogs almost monthly-a waste of trees, and my PO Box space, as I have no need for their products.

    At my local post office, there are two bins, to recycle junk mail. Almost all is bulk- catalogs and magazines.

    The firm I work with sends out a few hundred pieces of mail a week-all first class; at 45 cents per- cheaper then any other way to get the required paperwork to the recipients. (It cannot be emailed or faxed).

  4. LINDA SUNKLE-PIERUCKI says:

    @Michael: taxpayers dont subsidize the USPS-it is entirely self-supporting. Congress allots a small subsidy for certain mail users such as some disabled mailings. They have had problems since Congress made changes to their pension prefunding in 2006 and want 75 years worth of pension funds prepaid . . no govt agency does this but they are expected to. There was also a misconfiguration in the original benefits payment schedule in 1971 when the USPS was ‘privatized’ which amounted to about $75 billion in overpayment (except its not considered an overpayment because the wrong numbers were written into law-they’re wrong, but its the law). And you forget that these elderly people in small rural towns have been there just as long if not longer than most city dwellers. If they leave their old family homes and are forced to move to the city, someone will no doubt have to subsidize their housing costs-because their old homes are paid for and hold their family memories and history-and cant even be sold in this market. Business wont move to areas here there is no mail service. No one is asking for a bail-out (except that they have dragged their feet so long on allowing some restructuring that one may be necessarily at this point just to cover back arrearages). But Congress needs to actually either stop controlling/setting the rules or really look at the mess created by their meddling. People in these small towns dont have home delivery-they must go to the post office to send/receive the mail. No one is even suggesting that home delivery in the cities is an expense-yet most cities have several postal outlets within a short distance-and a city bus to get there-which these rural dwellers pay for but cannot use. Rural tax dollars subsidize many so-called city services. It would actually make more sense to cut those deliveries if cost-savings was truly the objective. These people will now be forced to travel 12-15 miles daily to get the bills and necessary communications, often on unplowed roads using gas they actually cant afford.

    Jay is right: USPS First-class mail is critical for communications that cant be faxed or emailed-and a great many cant. Nothing that comes from government can be communicated that way. USPS is far, far cheaper than any alternative-and no private business is interested in taking it on because it will never be profitable-they arent going to go into the business to break even. But to have the system actually work, one has to have Universal Service-to ALL areas! Direct mail doesnt even bother sending out to many outlying rural zip codes, therefore figuring that they are expendable because they themselves dont choose to serve them. So rural first-class mailers end up subsidizing direct mail from which they dont even benefit. And much of the direct mail/junk mail/catalogs are useless clutter-maybe if they had to pay nearer the true cost of mailing them, they’d save a few trees.

    There are plenty of parts of government that dont work. USPS comes closer to working than any other simply because it does try to cover its costs. But once its gone, there will be no going back-it would be a terrible loss to this country.

  5. Scott says:

    Paul,
    Loved the article. If only Fedex or UPS were allowed to compete in the first class mail market. How much cheaper could it be.

  6. Tj says:

    Two items of concern about privatization: 1. Who is going to drive to every delivery address in the nation (even 5 days a week) for less than 45 cents per letter? Answer: No one. 2. If there are competing businesses crossing boundaries which mail will have the priority to be delivered. Answer: Not the one they are competing with.

    The USPS has been a “hidden tax” for years. The feds dip their hand into the funds and then declare the USPS is losing money. Then they raise the postage rates; and repeat. (I understand the rate commission and the board of governors. This is a generalization for lay people reading this)

    Appointment to a Postmaster position has been competitive since 1971. No more political appointees since then. That’s over 40 years ago.

    Is there waste? You have no idea.

    I worked for the Postal Service for 30 years, 19 yrs as a Postmaster. The dedication and determination of most of the people I had the privilege to work with was exemplary. The others not so good. I could write a book about money I believe was wasted by bad managers, the unions, and public demands.

    Which leads me to this. The small post offices being considered for closing (public demand) probably should be closed. Every area where an office would be closed would still receive a delivery service by Rural Route Carriers or Highway Contract Carriers. These carriers are like a post office on wheels. They can do money orders or sell stamps. Whatever you need. Yes, you may have to wait until the next day to receive your request. Just plan ahead and on those rare occasions when you need something now you will have to take a trip to the post office, be it farther away.

    Early in my career I was the Postmaster in one of these small offices. The biggest challenge was not to be bored crazy. I did extra projects for my boss to try to stay busy. There were days when I did not have a single customer! Sorry folks, to keep these offices open is just not good. I know there are those who somehow see the identity of their little community tied to the post office. But keeping these little offices open is bad business. You can still keep your zip code as an ID.

    Like I said, I could write a book.

    Happy Thanksgiving!

  7. Jay says:

    Not mentioned–one way the USPS is cutting some costs, and could cut more-in some areas (near where I live-Tampa Bay, FL.)-the post office has “sub stations” in small stores. I used to know the people who ran one.

    They received a small (no idea how large or small; but were offered the chance to go on a commission basis, which they chose not to)and sold stamps, money orders, etc.; had 2 or 3 pick ups a day; but made money by selling complimentary items- greeting cards; stationary, wrapping paper; figurines, etc. Never 9when i was there) more then 3 or so people ahead of me; fast service; and I (and others) were able to get other item s-without the hassles.

    Expand that.

    don’t know if would work in rural areas, but could expand in the urban and suburban areas.

    and stop subsidizing the junk mail AND POLITICAL MAIL

  8. nrg says:

    How would you like to own the coffee shop inside the post office(dunkin donuts would, i’m sure)…or the bank teller’s window right next to the postal one? Just a couple of things that post offices could do to eliminate costs like ‘rent’.
    How about doing a deal with newspapers that isn’t onerous and could get paper’s delivered in those sacred postal boxes on the day of printing? That’d be an innovation and could save two industries at once…..by combining their efforts at the same cost.
    But I innovate too freely.
    Goodness me, there might event be more to do out there. But it’s not union friendly or government sanctioned. So it’ll never happen.

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