Check In The Mail To Bailout Post Office?

If there ever was a poster child for bureaucratic inefficiency and incompetence, it is the U.S. Postal System.  The ungainly appratatus stands as an example of what happens when a pseudo-government agency attempts to operate as a public enterprise using unsound business practices while ignoring market trends.

By its own admission, the Post Office is awash in red ink.  Postmaster General Patrick Donahoe estimates the service will lose a record $8 billion in the current fiscal year that ends in September.  Over the next decade, the losses could approach a budget-crippling $238 billion.

The Postal Service generates income by selling stamps and services to cover its costs.  The agency currently receives no federal subsidies.  However, with fewer people using the mail, revenues are sinking.  In most recent fiscal quarter, the agency posted a $3.1 billion loss. 

That doesn't even begin to describe the system's financial headaches.  Next month the Postal Service is expected to default on a $5.5 billion health benefit prepayment required by federal law.  The agency is unable to meet the obligation by borrowing money because it has reached its $15 billion limit, making default likely unless Congress or the government rescues the service.

In its review of the system, the Government Accountability Office (GAO) revealed that the current business model used by the Post Office is "not viable".  The audit, released in June, called for deeper cuts in jobs and wages in light of the 25 percent decline in first class mail over the past decade.

In summarizing its findings, the GAO cautioned that without drastic revisions, the Post Office's staggering losses will increase.   The calls for reform have gone largely ignored, although Donahue deserves credit for at least trying to whittle away at the bloated payroll.

His efforts have been opposed at every turn by the powerful National Association of Letter Carriers (NALC).  A union official recently wailed that his organization will "vehemently oppose any attempt to destroy the collective bargaining rights of postal workers."

The union wants to protect every one of the current 563,400 postal jobs.  Donahoe has raised the union's ire by calling for a reduction of 220,000 union employees as part of his plan for shuttering 3,650 post offices, many in rural locations.  The postal chief also wants to end Saturday mail delivery, which would save $3 billion annually.

Republicans in Congress are growing impatient with the impasse.  Led by California Rep. Darrell Issa, the GOP is considering legislation to rein in health benefits, reduce payroll and force changes to the pension fund covering 480,000 retired postal employees.    That has set off a firestorm of protests among union officials, who complained that "crushing postal workers and slashing service" will not solve the system's financial crisis.

Democrats have been quick to come to the aid of the beleaguered union.  Democrat Tom Carper who chairs the Senate subcommittee overseeing the post office, has voiced concern over whether the proposals "would be fair to employees."  Carper is only protecting his party's interests.  Postal unions have overwhelmingly supported Democrat candidates, including Obama in the 2008 presidential election. 

That fact undoubtedly explains why the president's proposed 2012 budget included a whopping $11 billion bailout gift-wrapped for the Postal Service.  The union was appropriately moved.  "We're pleased that the Obama Administration seems to recognize the seriousness of the Postal Service's financial condition..." a union official chirped.  News coverage of the proposed financial relief has been nonexistent.

Taxpayer funds won't fix this financial mess.  If the Postal System were a "real" business, it would have long ago filed for bankruptcy.  Washington needs to compell the system to exit the postal business, leaving the market to private companies to serve.