Tuesday, December 06, 2011

Lies, By Airmail

The US Postal Service is in pretty drastic difficulty. Of course, the usual suspects are laying blame at the usual feet:
How did it come to this? The culprits include the internet, labor expenses, and, as with pretty much every problem our country faces now, Congress.
When you analyze the facts a little, as Weismann clearly has not, you begin to understand that it's the last that is responsible for the problems, in toto.
Let's take a look...
Keep in mind that the US Postal Service is two things: it is one of the few Federal agencies mandated in the Constitution (under the guise of "Post Office," but more on that in a bit,) and it is the only private corporation masquerading as a Federal agency (yes, you can make a case for Fannie Mae and Freddie Mac and all the other nym-lending agencies, but those are public corporations in which the government holds preferred stock.)
Yes, the Internet and e-mail have made first class mail almost...almost...superfluous. And the decline in total mail volume has clearly hurt the postal service. Remember, the Postal Service must guarantee delivery to every citizen in the United States, regardless of how remote that person may be.
And ever since Congress allowed for the privatization of express delivery services to FedEx and others, a very profitable arm of the postal service was amputated, the bleeding never staunched.
By the way, none of the delivery services has to guarantee delivery to anyplace. They can make you get in your car and drive to a local facility where you can pick up your package, and then it's up to you to get it home. Good luck with that.
Which now raises the second facet of this point: the Postal Service must clear any rate increases with the Postal Regulatory Commission, membership on which is subject to Senate confirmation and Presidential appointment.
Meaning that, if for example, the USPS was to ask for a rate increase that recognizes that bulk mail now makes up the lion's share of its carrying obligation (the "universal service obligation"), if the commission is comprised of smart people that rate will be allowed. But half the current commission (a commissioner's seat is vacant, awaiting Senate approval) is not smart, but Republican.
And we all know the lobbying that goes on in Republican quarters. Indeed, a rate hike in bulk mail would not only trigger protests from the junk mail senders (who have a substantial lobbying presence) but the banks, credit card companies, retailers...well, you get the picture.
So, once again, the revenue stream is hampered by a Congress which wants private industry to make as much money as possible, except for this particular private corporation, which it views as a government agency.
Which now introduces point #2: labor costs.
It's true, the US Postal Service seems at times to be the employer of last resort: if you're too old to go into the military and can't get a job anyplace else, there always seems to be some post office somewhere that could use a hand.
Remember, the USPS is under a Constitutional mandate to deliver your mail, anywhere, and under a statutory obligation to deliver your mail anywhere...within six days. End of discussion. All for less than 50 cents. That means manpower, because the USPS can't go to the capital markets to raise funds to, say, automate better. That means that 80% of the Postal service budget is spent on people. By contrast, Fedex (which can float bonds to raise capital) can automate to their hearts delight (as can UPS) and cut delivery services without anyone forcing them not to. Fedex still spends over half its budget on payroll related items. UPS, almost two thirds.
That doesn't sound out of line with the USPS when you think about it, but the USPS is a government job.
And as with so many government jobs, the pay is crap but the enticements to stick it out are great.
Like a pension. The Postal service pension obligation is somewhere in the billions of dollars annually, like any other large government operation.
Unlike any other government obligation, the Congress deemed fit to "tax" the Postal Service $5.5 billion dollars each year as a contribution to the pension fund, and if you factor out that olbigation, the USPS turns a pretty stunning profit right up until 2010 (it still earned $400 million dollars, pre-pension funding.)
Mind you, that funding is to shore up pensions payable over the next several decades, not the immediate obligations (which are fully funded, thankfully.)
So the USPS is a private corporation when they want it to be, but a public corporation when they want it to be, which means things are pretty muddled and it really is all Congress' fault. If Congress treated it like a government operation, that entire pension would be funded out of our tax dollars instead of our tax dollars.
That's right: you and I subsidize that bulk mail thingie in both our postage and whatever small fundings Congress deems appropriate.
And it's this part that Weismann actually gets right: the Postal Service can't shut a branch without Congressional approval, despite the fact that 25,000 of 32,000 branches run an operating loss. It can't act as a private corporation when it has to.