Today, the United States Postal Service (USPS) is set to default on $5.5 billion of payments towards future retirees’ health care costs.
But it’s really not their fault.
Though USPS had long met a 1970 law’s requirement to be self-sustaining, Congress has failed to give USPS the tools it has needed to remain solvent in the last few years, instead leaving USPS in a kind of limbo between being self-sustaining and Congressionally-controlled. Instead of just bailing out USPS, Congress should allow USPS to be truly self-sustaining, letting USPS make its own operational decisions, and stem the flow of red ink by increasing postal rates and switching to 5-day delivery.
Though the mail delivery industry may be in decline, the industry itself is not the problem. Mail delivery can be profitable—indeed, even President Obama has admitted that “UPS and FedEx are doing just fine…it’s the Post Office that’s always having problems.” Congress’s widely decried requirement that USPS make regular contributions to its long-term financial obligations are not the problem either—though the $20 billion in pre-retirement payments that USPS has made since 2007 cannot have helped, USPS’s $25 billion deficit over the same period demonstrates that the pre-retirement payments are far from the whole problem. In any event, setting aside enough money to meet their long-term financial obligations is something that USPS should absolutely be doing, though Congress is apparently content to tell USPS to “do as we say, not as we do.”
The problem is that Congress does not let the supposedly self-sustaining USPS control its own postal rates and delivery schedule. If the USPS were able to control their own operations, which they surely know more about than Congress, USPS could have long since raised postal rates or gone to a 5-day delivery schedule to try and stop the bleeding.
With a number of reliable alternatives to USPS widely available, it would be foolish of Congress to simply bail out USPS. Instead, Congress should give it the operational flexibility it will need if it hopes to compete with UPS and FedEx and become profitable again.