While the United States Postal Service has been facing financial concerns for some time, it has never been as close to the brink of bankruptcy as it is today, with a $5.5 billion payment due in September and a lack of resources to make the payment. Unless Congress intervenes, USPS could have to shut down operations this winter. As the postmaster general, Patrick R. Donahoe, remarked, "If Congress doesn't act, we will default." With less demand for the service than ever, though, could competition against private competitors actually be a good thing? Let us know your thoughts in the comments.
According to the New York Times,
In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts. [...]
...[D]ecades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.
While USPS has the legal authority to shut down branches, it must go to Congress for permission to end Saturday delivery and layoff employees. Some more creative ideas to increase revenue are also being tossed around, including "gaining the right to deliver wine and beer, allowing commercial advertisements on postal trucks and in post offices, doing more 'last-mile' deliveries for FedEx and U.P.S. and offering special hand-delivery services for correspondence and transactions for which e-mail is not considered secure enough." Furthermore, post offices could run operations "out of stores like Wal-Mart or [share] space with other government offices."
Rep. Darrell Issa (R-Calif.), the chairman of the House Oversight Committee, says most of the Congressional proposals to save USPS would merely be expensive and ineffective bailouts that would not work to solve any of USPS's underlying problems. He instead favors creating an emergency oversight board to find spending cuts and allow labor contracts to be voided.
Missing the $5.5 billion payment, meant to finance retirees' health care, would not be the end of USPS, but it would signal that by early next year, USPS would run out of money. Do you think Congress should intervene to save USPS? Or do you think it would be to USPS's advantage to be forced to compete with the private industry and e-mail?
