Top managers at the U.S. Postal Service are desperately trying to save their organization. Members of Congress who argue that the nation cannot persevere without its accustomed mail service seem to be trying just as hard to kill it.
This makes no sense at all, but then, neither does anything Congress has to say about the Postal Service.
Facing increasingly dire straits as costs rise and the volume of mail plummets, the USPS has wanted to cut mail delivery to five days a week for some time. Postmaster General Patrick Donahoe was discussing the move over a year ago. His predecessor, John E. Potter, unsuccessfully asked Congress for authority to do so back in 2009.
As my colleagues and I have discussed in this space repeatedly over the past few years, the Postal Service faces massive fiscal challenges, fueled by the rise of the Internet, the recent recession, and Congress’ requirement that the agency pre-fund its employees’ substantial pension plans. The service’s 2012 annual report shows net losses of $41 billion over the preceding six years; net losses for fiscal 2012 alone totaled $15.9 billion. First class mail revenue continues to decline (by 3.9 percent last year), despite rising postal rates. Revenue is falling faster than the Postal Service has been able to cut costs. More drastic changes are inevitable.
Last month, the USPS went so far as to announce a firm plan to end Saturday mail delivery in early August, though six-day delivery of packages would remain in place. The American public seems to broadly accept the prospect of reduced mail service, though, as you might predict, the postal unions have led resistance to the idea. The change is expected to save around $2 billion annually if implemented as planned. It won’t solve the organization’s problems, but it is a significant step in the right direction.
What has followed the announcement is a confusing mess. Congress may, or may not, have ordered the USPS to continue delivering letters on Saturday - letters that virtually nobody needs to receive on that day anymore. Lawmakers asked the Government Accountability Office to review the proposal; the GAO now maintains that the Postal Service is obliged to deliver mail six days a week, and that retaining Saturday package delivery alone would not satisfy this obligation. The House Oversight and Government Committee seems to disagree with this assessment, based on its spokesman’s reaction to a New York Times article. The USPS’ legal position is, for the moment, murky.
The essential issue, however, is clear. Congress should get out of the way and let management do what it can to put the post office on a sustainable footing. Most of the public already recognizes that Saturday delivery of our bills, catalogs, real estate solicitations and birthday cards is unnecessary. And in the tiny fraction of cases where documents must be delivered on a Saturday, mailers can pay a premium for express mail via the Postal Service or for private options like FedEx and UPS.
The USPS is in desperate financial shape. Already, the Postal Service is consolidating post office locations and shortening window hours. Continuing Saturday delivery would be a waste of time, fuel and, most importantly, money. The Postal Service is supposed to run as if it were a private business, but it cannot do so while lawmakers continue to dictate its budget and operating procedures.
We do not yet know what useful role postal services will have in the remainder of the 21st century, but delivering junk six days a week certainly isn’t going to be it.
If anything speaks to the inability of Congress to make even the most rational decision, it is how it has handled the Postal Service in recent years. Legislators ought to get out of the USPS’ way immediately, before it’s too late. If they don’t, only a very expensive taxpayer bailout will save the Postal Service, which won’t make lawmakers popular with anyone at all.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
Top managers at the U.S. Postal Service are desperately trying to save their organization. Members of Congress who argue that the nation cannot persevere without its accustomed mail service seem to be trying just as hard to kill it.
This makes no sense at all, but then, neither does anything Congress has to say about the Postal Service.
Facing increasingly dire straits as costs rise and the volume of mail plummets, the USPS has wanted to cut mail delivery to five days a week for some time. Postmaster General Patrick Donahoe was discussing the move over a year ago. His predecessor, John E. Potter, unsuccessfully asked Congress for authority to do so back in 2009.
As my colleagues and I have discussed in this space repeatedly over the past few years, the Postal Service faces massive fiscal challenges, fueled by the rise of the Internet, the recent recession, and Congress’ requirement that the agency pre-fund its employees’ substantial pension plans. The service’s 2012 annual report shows net losses of $41 billion over the preceding six years; net losses for fiscal 2012 alone totaled $15.9 billion. First class mail revenue continues to decline (by 3.9 percent last year), despite rising postal rates. Revenue is falling faster than the Postal Service has been able to cut costs. More drastic changes are inevitable.
Last month, the USPS went so far as to announce a firm plan to end Saturday mail delivery in early August, though six-day delivery of packages would remain in place. The American public seems to broadly accept the prospect of reduced mail service, though, as you might predict, the postal unions have led resistance to the idea. The change is expected to save around $2 billion annually if implemented as planned. It won’t solve the organization’s problems, but it is a significant step in the right direction.
What has followed the announcement is a confusing mess. Congress may, or may not, have ordered the USPS to continue delivering letters on Saturday - letters that virtually nobody needs to receive on that day anymore. Lawmakers asked the Government Accountability Office to review the proposal; the GAO now maintains that the Postal Service is obliged to deliver mail six days a week, and that retaining Saturday package delivery alone would not satisfy this obligation. The House Oversight and Government Committee seems to disagree with this assessment, based on its spokesman’s reaction to a New York Times article. The USPS’ legal position is, for the moment, murky.
The essential issue, however, is clear. Congress should get out of the way and let management do what it can to put the post office on a sustainable footing. Most of the public already recognizes that Saturday delivery of our bills, catalogs, real estate solicitations and birthday cards is unnecessary. And in the tiny fraction of cases where documents must be delivered on a Saturday, mailers can pay a premium for express mail via the Postal Service or for private options like FedEx and UPS.
The USPS is in desperate financial shape. Already, the Postal Service is consolidating post office locations and shortening window hours. Continuing Saturday delivery would be a waste of time, fuel and, most importantly, money. The Postal Service is supposed to run as if it were a private business, but it cannot do so while lawmakers continue to dictate its budget and operating procedures.
We do not yet know what useful role postal services will have in the remainder of the 21st century, but delivering junk six days a week certainly isn’t going to be it.
If anything speaks to the inability of Congress to make even the most rational decision, it is how it has handled the Postal Service in recent years. Legislators ought to get out of the USPS’ way immediately, before it’s too late. If they don’t, only a very expensive taxpayer bailout will save the Postal Service, which won’t make lawmakers popular with anyone at all.
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