The United States Postal Service lost almost $4 billion dollars last year, it stands to lose another $7.8 billion (by their own estimation) next year. So what’s the solution? Postal Service bailout of course; at the present they’re borrowing government money just to stay afloat, but they’re nearing the legal cap of $15 billion that they can borrow from the Treasury. You can thank Danny Davis for the bailout idea.
So far the US Postal Service has borrowed over $10 billion dollars from the government just to keep the doors open, and at the rate things are going they could max out their legal debt ceiling in the next two years. Federal law only allows the Postal Service to borrow $3 billion per year.
Several solutions have been bandied about, but really none that would allow the Postal Service to continue operating as we’ve always known it. Rep. Danny Davis, an Illinois Democrat, feels that a Postal Service bailout could be in order. Davis says that the Postal Service is the one essential lifeline to millions of Americans and shouldn’t just be shut down totally.
Most people nowadays communicate via the internet, whether it be through email, paying bills online or even clipping coupons. For millions more Americans the Postal Service is not needed at all. Essentially for the Federal Government it’s a sacred cow that they need to save. But the United States Government is in such a bind now with the numerous bailouts that have come before, how could they possibly justify a Postal Service bailout of any amount?
There is some light at the end of the tunnel for the Postal Service; a CBSNews report quotes a spokeswoman who actually talked about free market principles and running the Postal Service more like a business than a government entity. The spokeswoman talked about two major ways the Postal Service could cut costs. From the CBSNews report:
The first is freedom from a government-mandated requirement that the agency pay more than $5 billion per year into a fund to cover its retired employees’ future health benefits over a ten-year period. The government allowed the agency to forgo $4 billion of that obligation this past year, but the requirement remains on the books.
Can anyone say unions? Just like the car companies the Postal Service can’t afford to be obligated to unproductive former employees to the tune of $5 billion a year. No business on Earth would be able to sustain that, including the Postal Service.
The second goal, critics say, is a fundamental threat to the identity of the Postal Service: The end of Saturday mail delivery. The Postal Service has suggested cutting Saturday service could save 3.5 billion per year, though the Postal Regulatory Commission (PRC), which regulates the Postal Service, puts that figure at $2 billion.
It sounds like the government doesn’t want to lose its identity as the only way to send or receive mail on Saturday. But sometimes hard decisions need to be made to keep a business going. If things were to shake out and get better the Postal Service could always re-institute Saturday delivery.
Rep. Danny Davis said he’s not afraid of spending public money to keep money flowing. Basically the mantra of the Democratic party and government in general these days. The only problem with that is there isn’t much money flowing through the Postal Service right now.
Would a Postal Service bailout solve the problem for good? It’s doubtful, especially if these other changes weren’t implemented. It would just be prolonging the inevitable, the closure of the US Postal Service.
November 22nd, 2009 at 3:02 am
They pay their employees too much. Government pensions are too generous, they lack competition. These are SOME of the reasons why the postal service is in trouble.
Another reason is the internet. The amount of mail delivered due to individuals has declined quite a bit due to people using emails, Facebook, cell phones and other means of communicating besides snail mail.
November 22nd, 2009 at 8:35 am
The unions are the problem as usual. I read an article about postal emloyees who spend entire days in lunchrooms doing nothing because the union stipulates that they need be paid rather than sent home.
I’m sorry, but unions have become a scourge on American industry. Their days of usefullness have long past.
November 22nd, 2009 at 5:09 pm
What else is new. The government can’t fix anything so they just try to do things the half fast way. There are two ways to really fix the post office and that’s it. The first option is you downsize the post office to just what we still need from it. People don’t send letters anymore they use e-mail and Fed Ex. Now option number two would be raising the price of stamps. It’s not right to let tax payers and people of the next generation pay for something that doesn’t work.