Congress Is Strong-Arming The Postal Service Into Bankruptcy Even Faster

On Thursday, Congress voted against allowing the U.S. Postal Service to cut its delivery down to five days a week, forcing the organization to keep delivering mail on Saturdays. This will drive the USPS into looming bankruptcy — already foisted upon the USPS by Congress itself — even faster.

In 2006, Congress passed the Postal Accountability and Enhancement Act, mandating that the USPS front the money for 75 years of employee pensions — a requirement no other public or private institution faces.

In trying to scrape up money for the pensions of kids who haven’t even graduated high school yet, the USPS has spiraled into near-bankruptcy. Without the pension requirement, a July 2012 analysis showed, the USPS would have a $1.5 billion surplus. Instead, it’s billions of dollars in the red.

Dropping Saturday delivery was supposed to be its way of trying to fight these congressionally-imposed deficits. But yesterday, Congress rejected the five-day proposal, roundly agreeing that the USPS must keep its service at six days a week, even though it can hardly afford to do so.

Now, the USPS is looking for a workaround to see if it can cut back on first-class mail, magazine, and direct mail delivery while still meeting Congress’s six-day mandate.

Though the Postal Service is an independent agency, a legal opinion by the Government Accountability Office found that it needs Congressional approval to change its budget or delivery schedule.

Congress has apparently not considered that postal access matters, particularly to rural Americans. Members of Congress seem content to let the USPS flounder, despite the fact that it would take just one simple step to fix the USPS’s budget problems: repealing the pension requirement. It doesn’t look like Congress will let that happen any time soon.

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And Now for a Postal Bailout

It’s another week in Washington, and it’s yet another bailout.  This time, taxpayers will be tapped for another $41 billion to subsidize the healthcare retirement benefits of postal workers – benefits that are quite scarce in the private sector.

Democrats have a serious problem with creative destruction and advancements in technology.  For self-described progressives, they are quite regressive when it comes to efficiency in markets and use of technology.  They exhibit nostalgia for 14th century energy technology and 20th century banking technology.  Hence, they don’t care too much for market progression.  In concerted drives to hold back the tide of technology, they are quick to offer a helping hand to a dying industry.  One such industry is the mail delivery.

It’s no secret that the United States Postal Service is on its way out.  The transition to electronic communication, in conjunction with the success of private mail carriers, has dramatically reduced the demand for their service.  Consequently, they no longer generate enough revenue to function as a self-sufficient entity, particularly when it comes to paying employee retirement benefits.  In recent years, the USPS has patched the annual losses with borrowed money from the Treasury.  However, it is now in such dire straits that it’s expected to hit the $15 billion borrowing cap later this year.  It needs extra taxpayer cash to fill in the gaps.

If the USPS were a private entity, it would trim its workforce and operations to the amount of revenue they can produce until they are eventually forced to go out of business.  That’s how creative destruction and supply and demand work in the real world.  That is not how it works in Washington.

In order to continue operating at a limited capacity, which is what the free-market would dictate in this circumstance, there is a plan to end Saturday delivery, cut the workforce by about 220,000 employees, and close 3,700 local post offices and 252 processing centers. Postmaster General Patrick Donahoe even asked Congress for the flexibility to act more like a business and use innovation to restructure and cut costs.  But Democrat nostalgia for the past is too potent to overcome.  They are completely averse to gradually winding down the Postal Service.  Claire McCaskill has even suggested that people write more letters so that the USPS will have more work.

Once again, a bipartisan group of senators plan to bail out a failing government entity with taxpayer dollars, allowing them to operate, more or less, at current capacity for much longer.  S. 1789, which has 2 Republican cosponsors, will grant a $41 billion bailout to the postal service for the purpose of managing the payments of healthcare benefits for its retirees.  Harry Reid is planning a cloture vote late Monday afternoon, following a vote to raise taxes on oil companies and hand the proceeds to green energy companies.

As part of the proposal, sponsored by Joe Lieberman, the USPS would be entitled to recoup $11 billion in so-called overpayments that it gave to the Treasury for employees’ retirement benefits held in the Civil Service Retirement System.  The problem is that there are no overpayments.  Last year, the GAO ruled that the Postal Service was wrong in their assertion that they paid too much money to the Treasury to fund employee retirement benefits.  As such, any money recouped from the Treasury would engender more taxpayer funding.   Don’t let them fool you with language pertaining to “transfers” and “overpayments.”  This is a pure bailout.

It’s time to let the wheels of economic progress spin.  Let’s do to the Postal Service what should have been done with Fannie Mae and Freddie Mac.  It’s time to attempt to privatize it or wind it down.  Either way, taxpayers should not be exposed to more bailouts.

Cross-posted from The Madison Project

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