Neither snow nor rain nor gloom of night stays the U.S. Postal Service from its appointed rounds, as long as it gets a giant bailout. Largely reduced to a delivery service for subsidized junk mail, crippled by sweetheart deals with its labor unions, the Postal Service is a good candidate for the dead-letter box. Instead, its managers are frantically lobbying for a federal bailout nearly twice the size of the one General Motors got.
Make that two bailouts. The Postal Service is not only trying to sneak a direct $75 billion payment out of the government without congressional approval, it’s also asking to be let off the hook for a $5.5 billion payment into a trust fund to guarantee the absurdly generous pension benefits it has promised its retirees. When the Postal Service can’t pay those benefits a few years down the line, who do you think will get the bill? Hint: Look in the mirror.
Adding $75 billion (plus who knows how much later when the Postal Service pensions implode) to the federal deficit at a time when federal debt is already bigger than half the entire output of the U.S. economy is a bad enough idea on its own terms.
But it’s even worse in the precedent it sets for using vast sums of taxpayer dollars to preserve industries being swept into the dustbin of history by technological change. Newspapers, movie theaters, broadcast radio and TV: They’re all besieged by the Internet. Will they be strapped to the federal life-support machinery, too?
That’s the fundamental problem for the Postal Service. It’s wedded to a dying ink-on-paper technology in an electronic world. Think about it: When’s the last time you wrote somebody a letter, stuck it into an envelope and slapped on a stamp? The amount of first-class mail fell 19 percent during the last decade, and it’s expected to drop another 37 percent over the next one.
More than half the Postal Service’s business these days is generated by junk mail that’s delivered at less than cost thanks to the lobbying prowess of the direct-mail industry. The percentage of junk mail is only going to rise as digital bill-paying gets safer and more efficient.
The Postal Service can’t be blamed for the invention of email or the fax machine. But it surely is responsible for the giveaway contracts it signs with its labor unions. About 80 percent of the service’s budget goes to salaries and benefits, compared to 61 percent at UPS and 43 percent at Federal Express.
Even by the voracious standards of public-sector unions, the Postal Service unions are an insatiable bunch. When the largest of them, the American Postal Workers Union, opened contract negotiations last fall, APWU president William Burrus was perfectly blunt about what he was demanding: “More control over activities at work, more money, better benefits — we want more.” He got it, too: The new contract included a 3.5-percent raise, a no-layoff clause, and seven cost-of-living increases over the next four and a half years.
You don’t need an advanced degree in mathematics to calculate that a dying business model plus spendthrift policies equals bankruptcy. Sure enough, the Postal Service — which, though a federal agency, is structured like a business and is supposed to pay its way — lost $20 billion between 2007 to 2010. It stayed afloat only by borrowing $12 billion from the government. But the freebie line of credit is legally capped at $15 billion, and the Postal Service will hit the limit sometime later this year.
In the Age of Obama, that means it’s time for a bailout. Not that the Postal Service is crass enough to use that term. In a steady stream of propaganda that’s gleefully amplified and repeated by the trade press in industries that rely on junk mail, the Postal Service insists that it’s just asking for a return of $75 billion in “overpayments” to a federal pension fund over a 40-year period. And because it’s just a refund, not an appropriation, there’s no need for that messy congressional approval process, either. The Treasury Department can just drop the check in the, heh-heh, mail.
That’s such a bald-faced money grab that even other Washington bureaucracies are blowing the whistle on the Postal Service. In a highly unusual rebuke from one agency to another, the federal Office of Personnel Management (OPM), which overseas government pension funds, said the Postal Service wasn’t entitled to a penny. For one thing, OPM says, Congress explicitly approved the way the Postal Service pension contributions were calculated, and the Postal Service didn’t murmur a word of complaint for four decades.
And for another, the Postal Service has already been reimbursed for the pension payments — they were included as a cost of business when setting postal rates. That is, every time you mailed a letter over the past four decades, you were paying for your mailman’s pension. But now the Postal Service wants to bill you again.
I’ve got a better idea: Let’s stamp it Return to Sender.