After refusing to pass a budget for three years, the Senate today moved a postal “reform” bill that edifies the upper chamber’s refusal to confront the nation’s fiscal problems. Rather than reform the postal service’s bloated bureaucracy, the Democrat Senate has expanded the federal carrier’s authority and pushed it further towards bankruptcy. Unfortunately, the already watered down Senate bill only worsened throughout the amendment process; nearly every amendment that would have made S. 1789 more like Issa’s Postal Reform Act failed.
Given that over 80 percent of the Post Office’s costs are labor related—while FedEx and UPS spend 20-40 percent less—it is not surprising that the government entity can afford to shed 220,000 employees, according to its own estimates. Unfortunately, S. 1789 does little to right-size USPS’s workforce and rein in overhead costs. Additionally, S. 1789 leaves thousands of unnecessary post offices and mail processing facilities untouched and requires Saturday delivery for at least two more years.
Not accounting for declines in mail volume, and subsequent declines in revenue, the USPS finds itself left with staff, infrastructure, and benefits it can no longer support. In 2010 the USPS lost $8.5 billion. Even after cooking the books and postponing $5.5 billion in retirement payments, the USPS still lost $5.1 billion in 2011. The Council for Citizens Against Government Waste points out that in 2010, former Postmaster General John Potter predicted that the USPS would lose $238 billion over ten years should the necessary reforms—absent in the bill before the Senate—fail to be implemented.
Another concern that was not alleviated through the amendment process is whether or not USPS should be able to offer new services and products in order to bring in new revenue. In the past when the USPS has faced shortfalls, the entity has attempted to offer consumers more products—international shipping, ties, and other eventual boondoggles. These forays into other services have consistently ended poorly. Firstly, the USPS is not equipped to deliver these products at market price, so these new products inevitably result in a loss for the USPS. Secondly, any revenue the USPS gains comes at the detriment of a private company offering the same service.
Leveraging the government’s support of USPS to encroach on private businesses is bad policy and should be explicitly prohibited. Yet, the Senate bill leaves the door wide open for these types of job-killing activities.
Every day Democrats postpone meaningful USPS reform, the more difficult and painful eventual USPS restructuring will be.