Convenient Untruths

When the postal service announced in November that it had incurred a $15.9 billion loss in the fiscal year that ended Sept. 30, 2012, newspaper editorial boards and anti-government politicians cited the figure as proof that the Postal Service is doomed. They bemoaned the USPS financial crisis and called for privatization of the nation’s mail system.

Many blamed the Internet and some even attributed the postal deficit to “excessive” labor costs.

But those explanations are just convenient distortions of the truth.

Postal bashers are blinded by their desire to dismantle government and destroy large public-employee unions.

The truth is, were it not for the unreasonable pre-funding mandate imposed on the Postal Service by Congress in 2006, the USPS would have broken even or shown a profit in four of the last six fiscal years. The requirement to pre-fund 75-years worth of healthcare benefits for future retirees over a 10-year period is bleeding the Postal Service of $5.5 billion a year. The pre-funding obligation — which no other government agency or private company faces — accounts for approximately 80 percent of USPS losses.

Imagine if you were saving money each year for your child’s college education and you were told that in addition to financing your child’s education you also had to sock away enough money to pay for your grandchildren’s education and your great-grandchildren’s education. This is what Congress did when lawmakers required the Postal Service to fund retiree health benefits 75 years into the future.

The pre-funding requirement is the #1 reason for the Postal Service’s financial crisis.

Those who blame labor costs for the Postal Service’s financial difficulties conveniently overlook the fact that there are 280,000 fewer postal workers today than there were 10 years ago. They also fail to note that postal employees’ pension accounts are over funded by billions of dollars.

Those who blame the Internet for the Postal Service’s problems ignore the fact that at least a portion of the decline in mail volume is due to the Great Recession. While some first-class mail will never come back (due to electronic bill paying) package delivery is growing at double-digit rates. Standard mail is also making a comeback as the economy improves.

Desire to Dismantle

Postal bashers are blinded by their desire to dismantle government and destroy large public-employee unions. The unreasonable pre-funding mandate was not a miscalculation. It is having exactly the effect that was intended — to make the Postal Service ripe for privatization.

It doesn’t’t have to be this way. According to a recent study by Oxford Strategic Consulting, the Postal Service is the most efficient mail delivery business in the world.

No private company can do what the Postal Service does — not FedEx or UPS, or any other postal system in the world. Last year, the USPS delivered 160 billion pieces of mail to more than 150 million delivery points — all without a dime of taxpayer money.

The Postal Service delivers more than 30 percent of FedEx Ground shipments and a significant portion of UPS parcels. No company goes everywhere the USPS goes.

Congress created the USPS financial crisis and Congress must fix it. To revitalize the Postal Service, legislators must rescind the restrictions placed on the Postal Service during the 2006 lame-duck Congress and allow the Postal Service to expand into other services. Legislators also must allow the Postal Service greater flexibility in setting rates.

We must continue our fight to help them get it right.

Greg Bell
Executive Vice President

(This article by first appeared in the January/February 2013 issue of The American Postal Worker magazine.)