Suppose you own a business that hemorrhages red ink every year. In the latest year, your firm loss $8.86 billion. Your company's total indebtedness is $160 billion and climbing. Even worse your main source of revenues is shriveling. Would you keep pouring more of your money into this miserable business?
The enterprise described above is the United States Postal Service. The archaic service is the subject of a fierce political battle in Congress. Democrats want to throw a $25 billion lifeline to the embattled agency. They claim the issue involves nothing less than maintaining the integrity of the presidential election.
With Democrat-run states promoting mail-in voting, they have dredged up a canard to force Republicans to relent after the GOP refused to support a $20 billion bailout in March as part of the stimulus package. This is nothing more than a stunt to paint the president and his party as villains opposed to fair elections.
In the spring, House Speaker Nancy Pelosi charged the Postal Service required an immediate injection of taxpayer money to avoid imminent bankruptcy. Her opening gambit called for $25 billion. She revised it to $50 billion and upped the ante to $75 billion. Last week the House settled on a $25 billion bailout.
At the time of Pelosi's dire prediction, the kerfuffle over mail-in ballots had not escalated into a full throated political catfight. With the election looming, the speaker decided to flip the issue to forge a new narrative. This is really about ensuring that mail ballots are delivered, she now insists.
To put the dispute in perspective, the agency has $160 billion in unfunded pension liabilities and debt with no clear path to profitability, according to a Government Accountability Office (GAO) report issued in May. The watchdog highlighted "progressively worsened" financial viability since its 2009 review.
In its report, the GAO underscored that the post office was organized to be self-sustaining but rang up a $78 billion deficit during the fiscal years 2007-2019. The GAO singled out declining mail volumes at a time when wage and benefit costs are spiraling at an increasing rate.
Despite handling fewer pieces of mail, the agency has increased its workforce. In 2007, the agency's head count was 786,000. Faced with less volume, USPS trimmed its force to 617,000 in 2013. Today the Post Office has 633,110 workers. Increasing head count in the midst of falling volumes is bad business.
Since 2012, the Postal Service has defaulted on payments for pre-funding retiree health benefits. As a result, from 2012-to 2016 it failed to pay $33.9 billion toward funding the benefits. It puts future payments to retirees in jeopardy. USPS keeps raising rates to stave off the inevitable collapse of its scheme.
In January this year, the post office raised overall mailing rates by 1.9%, on the heels of a 10% hike in the cost of a first-class stamp and an increase of 2.45% on other services in 2019. The moves were designed to raise revenues by more than $2 billion. However, expenses continue to outpace revenues.
In its annual report to Congress for the most recent fiscal year, the Post Office recorded $71.3 billion in revenues and $80.1 billion in expenses. Compensation and benefits accounted for $47.5 billion of the expenses. The agency had a net loss of $8.86 billion.
Until 2007, rising mail volumes and high-margin letter delivery enabled USPS to frequently break even. Then the recession struck and businesses, the originators of the majority of all mail, bailed on paper mail. USPS, which handled 213 billion pieces of mail in 2006, processed 142 billion in 2019, a 33% decline.
The Post Office's retail operation has also suffered a steep decline. Customer visits to post office locations totaled 1.06 billion in 2012. In 2019, in-person visits plummeted to 812 million, a decline of 23%. In the face of such results, prudent business managers cut personnel and lower expenses.
As volumes plunge, less infrastructure is required to manage the flow of mail. The postal service began consolidating operations to reduce costs, including the removal of sorting machines. This practice predates President Trump and current Post Master General Louis DeJoy, who took office in June.
The previous Post Master General Megan Brennan, a former letter carrier who worked 34 years with USPS, served from 2015 until 2020. She and Mr. Trump exchanged verbal jabs during her tenure. Even after ordering cost reductions, she said the service would continue to post losses at an "accelerating rate."
That hasn't stopped Democrats from accusing the administration of election tampering. Their allegation includes charges the post service is removing collection boxes to thwart ballot counting. In reality, there are 141,000 blue-collection boxes in the nation, which are often moved from low-to-high demand areas.
The Democrats know this, but are branding it a heinous plot by the post master general. Nonsense. Undeterred by the truth, Democrats also charge the Post Office is locking some blue mail boxes to prevent ballots from being inserted in mail slots. This one hardly dignifies a response.
This practice of locking some blue boxes is standard operating procedure. These so-called caps are put on collection boxes when there is a rash of mail thefts. Postal workers place the red caps on the boxes after the final pickup of the day and remove them the next morning, since thefts are mostly done at night.
In an effort to placate Democrats, Postmaster General DeJoy announced last week the planned removal of mail processing equipment will be suspended until after the November election. But even this concession will not prevent Democrats from ginning up conspiracy theories to extort a parachute for USPS.
The Democrats' allegations are also part of a coordinated effort to counter Mr. Trump's claims of the possibility of massive voter fraud with mail-in ballots. They want to shift the talking-point to the administration's alleged attempts to sabotage mail balloting by manipulating the postal system.
This is all a smokescreen for Democrats to bail out the financially insolvent USPS. If the post service were a private business, it would have long ago declared bankruptcy. But because its service touches millions of Americans, Congress keeps feeding it more money, including a $10 billion loan earlier this year.
Democrats also want to save the post office to prop-up the National Association of Letter Carriers, the union that represents most postal workers. Democrats have a vested interest in keeping the NALC union afloat because 77% of its political action committee donations go to Democrats, according to OpenSecrets.
No matter what happens USPS should be able to easily handle the increased volume. The agency sorts and delivers billions of items every single week. The scale of the mail-in ballots is in the tens of millions. On any given week, the volume of mail-in ballots handled will be a few percentage points of the total.
There will be a larger surge in mail during the Christmas holiday season. Despite the annual spike, the Post Office manages to handle the Tsunami of mail and packages. How will mail-in ballots be any different? The USPS union has seized the mail-in ballot issue to lobby for funding.
A San Antonio union official inadvertently revealed the threat his members fear most. "This (lack of funding) is to undermine how good we are, and to finally say, 'Oh, well, you just got to privatize it,' and that's totally wrong, what they're doing," complained Carlos Barrios of Local 195 in San Antonio.
Union leaders are clearly worried about renewed calls to privatize the Post Office. Such a move would likely result in thousands of layoffs, weakening the power of the union. Given the agency's deteriorating finances, privatization makes more sense than continuing to prop up a business dinosaur.
Democrats and all Americans should be more concerned about the states' ability to count every ballot in a timely manner. Converting to a vote-by-mail system is an arduous process. Many states are ill prepared to conduct a mail election with their current resources. Look no further than what happened in New York.
Six weeks after New York's June 23 primaries, election officials were just wrapping up the vote count. An election official told The Atlantic the "jury-rigged system" had failed its debut. It is a dire omen of what can be expected in November as many states struggle with building the election infrastructure.
Five states have regularly conducted exclusively mail balloting: Colorado, Hawaii, Oregon, Utah and Washington. Twenty-eight states have expanded absentee balloting; mailed ballots to all eligible voters; or relaxed the rules governing who may request an absentee ballot.
This stew of different procedures and varying levels of state experience with mail balloting is likely to produce an election night catastrophe rivaling the hanging chads controversy of the 2000 election. Even a $25 billion infusion into the Post Office will not solve that looming calamity.
The House package still must be approved by the Republican controlled Senate and signed by the president. Expect the GOP to cave on the issue. Then it will be up to Mr. Trump to end the charade and insist the Post Office operate within its budget.
No comments:
Post a Comment