Political Costs of the USPS
President Barack Obama signed a measure last week to give the U.S Postal Service $4 billion worth of breathing room for the next year. The measure just barely got through, according to some reports.
For our industry this is a good thing. It means that at least until next September mailers will be able to keep on mailing and their correspondence will keep getting delivered to every far corner of the U.S. at fixed predictable rates at a time when the industry, if not the whole economy, is still on shaky ground.
What Obama actually signed was legislation deferring an onerous $5.4 billion annual payment to a fund that covers healthcare premiums for retired postal employees. Instead the USPS only had to fork over $1.4 billion, this year leaving it with $4 billion to cover its increasingly money-losing operations.
And even this might not be enough to stave off further postal financial calamities.
It’s funny but everything right now seems to come down to paying for healthcare.
In face of loud strident opposition in some quarters to his overall healthcare proposals, the last thing the President needs is for probably the only federal institution that people trust to go broke right before mid-term elections.
Maybe it’s time to rethink some of the premises on which the USPS now operates.
Some observers think it might be time to give the USPS authority to close more facilities and/or to lay off more employees—just as is happening everywhere else in the country.
Similarly, the idea of cutting mail delivery down to five days from the current six seems dead in the water in Congress.
But it’s important to remember it was the Postal Accountability and Enhancement Act of 2006 that gave the USPS the $5.4 billion annual obligation until 2016 even though the law also granted mailers small predictable rate increases and gave the USPS greater flexibility to compete in the marketplace.
This healthcare-cost burden, which officials say is unique to the USPS, quite possibly doomed postal reform from the start.
Who knows what will happen?
It’s unlikely Congress will take up postal reform again anytime soon.
Maybe it’ll just have to pass a series of stopgap measures each year until 2016 and possibly beyond.
