What’s Happening to the US Postal Service?

Today, I received an email from my bank informing me that the USPO will start delivering first class mail to addresses more than 300 miles away as much as two days later than it does now. The email contained a link to the post office explaining what it is all about.

The Postal Service will increase time-in-transit standards by 1 or 2 days for certain mail that is traveling longer distances [>300 miles]. By doing so, the Postal Service can entrust its ground network to deliver more First-Class Mail …

USPS explains why it is doing this:

The service standard changes that we have determined to implement are a necessary step towards achieving our goal of consistently meeting 95 percent service performance.

In other words, since it can’t meet its current service standards it will relax the standards rather than bring its service up to par. The real reason for this downgrading is that

In 2006, Congress passed a law that imposed extraordinary costs on the U.S. Postal Service. Title VIII of the Postal Accountability and Enhancement Act (PAEA) required the USPS to create a $72 billion fund to pay for the cost of its post-retirement health care costs, 75 years into the future. This burden applies to no other federal agency or private corporation.

It’s highly probable that the Republican majority in Congress intended to privatize the US Post Office, much like the United Kingdom privatized the Royal Mail Service. Instead of a public service, the Republicans in Congress anticipated that the USPS would ultimately to go bankrupt, to be sold to a profit-seeking corporation or financial institution. In the United Kingdom, the financial institutions that purchased the British post office saw a huge increase in its stock value in a single day: from 330p to 455p. In essence, the British government “effectively gave away £1 billion in public assets to those who already had money going spare.” I wonder how much money the future buyer of the USPS will net when when the buyer flips it the next day. Suppose a Chinese bank made the highest bid. What happens then?

Needless to say, the Royal Mail service is being cut back as this article is being written.

The cutback in service announced by the USPS is the direct (and predictable) result of the financial distress incurred by the post office in fulfilling requirements imposed by Congress that it fully fund employees’ pensions. Were the Postal Service required to fund pensions in accordance with commercially-accepted practices (pay as you go), it would have been making a profit instead of incurring the losses that it has been needlessly experiencing.

Under the current rules imposed by Congress, the postal service can only become worse and worse as it cuts back on services in order to make excessive payments to its pension fund. Unfortunately, the American public is uninformed of the change in the law, and even if it were informed, most persons would not understand its implications. All the public will know is that postal service is becoming less reliable and more expensive. The Murdoch media (Fox network and the WallStreet Journal) will blame this on the inherent “inefficiency“ of government services in general and will do their best to convince their readers and listeners that the only way it can be “saved” is to privatize it.

Only Congress can cancel these ill-advised plans and it will do so only if it feels public pressure to do so.