Does Post Office Bankruptcy Forewarn of Healthcare Debacle?

Employing over a half million people and operating the world’s largest vehicle fleet, the United States Postal Service is the country’s third largest employer. The only other two employers that are bigger are our own grandiose Federal Government and of course Wal-Mart. While the Postal Service does get small subsidies, they are mostly funded by shipping and handling charges and stamp sales. Of course, they also sell insurance if you want to make sure that your letter or parcel is delivered to the correct destination safely (which most people think is what we’re paying for when we pay for stamps).

Oh, and they do borrow billions of dollars from another quasi-government agency, the Federal Reserve, which is taxpayer-funded through inflation. And they don’t have to pay property taxes or deal with sales taxes or vehicle registration fees for their massive fleet. They can also seize property through eminent domain if they want to. Now they have to cut back on services.

They announced in December of 2011 that they will be eliminating 28,000 jobs and closing thousands of branches and replacing some of them with smaller and more basic “village post offices” inside grocery stores and drug stores. They’ve also been halting Saturday deliveries and cutting daily operating hours from 8 hours to 4 hours. For the past several years, the Postal Service has been experiencing declining revenues and record losses, mostly because of our desire to get away from “snail mail” and go toward e-mail.

We use the postal service for the same reason we use Federal Reserve Notes: we have no choice. They have a monopoly on the delivery of first class mail. We might use UPS or FedEx or some other company if we were free to do so, but right now, it’s illegal.

The USPS depends on junk mail to justify its existence, so they hope that election season and the holidays will bring their declining revenues up a little, enough to get them through the winter. In spite of all the “subsidies,” the tax breaks, the cuts, the downsizing, they’re going to default on their payments to the Treasury.

Ever since 2006, Congress has required that the Postal Service pre-fund 75 years’ worth of retirement pensions in a 10 year period, and they can’t afford it. Their annual $5.5 billion payment is due on August 1st, and another $5.6 billion is due in September. They don’t actually anticipate going bankrupt (because we know they would just be bailed out), but if it were any other business, they certainly would.

They will, however, default on their payments to the Treasury, and this will be the Postal Service’s first ever default. Postal unions are blaming Congress for the USPS’s retirement plan requirements that no other agency of government has to adhere to. It does seem to be a completely unreasonable requirement, kind of like mandating that businesses provide health insurance to their employees. And not that providing such benefits is bad either. It’s just that whenever government steps in and starts calling the shots as to how to run a business, expect that business to fail, unless the government just wants to take it over by bailing it out.

The USPS was started by our founding fathers, and Ben Franklin was appointed the first Postmaster General. Article 1, Section 8 of the Constitution gives Congress the power “To establish Post Offices and post Roads.” I’m not sure that Ben would be happy with what he helped create in 1775.

We certainly don’t need a government-operated first class mail service. As soon as they officially tank, UPS, FedEx, or some other companies would pick up the slack and compete for the business. Privately owned companies always do a better job than government-run ones because of the nature of government. It’s inefficient and disorganized, and when they establish a monopoly, there’s no incentive for customer service. The U.S. Postal Service is not “too big to fail.” I’d say let it fail.