You may not realize how much small towns and rural areas depend on the mail until someone puts it like this: “Folks who die after midnight on a Friday could be buried before their relatives read about the death in my Monday edition.”
That’s what the editor of a small-town newspaper in Lebanon, Tennessee had to say about a proposal by the U.S. Postal Service to drop Saturday delivery.
The Postal Service says it’s losing billions of dollars each year. To close the gap, it has proposed shuttering nearly 2,500 post offices nationwide, most of them in rural areas, along with possibly reducing deliveries to five days a week. But as with most information coming from Washington, DC, there’s more to this story.
The Postal Service actually is making a profit. Yes, that’s right–in operational terms, the Postal Service makes more money than it spends.
So why do we hear all those reports about the Postal Service losing tons of money?
Here’s what is really happening. Suppose you were required by law to deposit a huge portion of your earnings each year in a savings account to pay bills you won’t get until decades from now. Your neighbors aren’t required to do that, just you. Without that cash to use for everyday expenses, you would probably have trouble paying today’s bills. That’s essentially what’s happening to the Postal Service.
Congress requires the Postal Service to put $5.5 billion of its earnings each year into a separate account to “pre-fund” future retirees’ health care insurance far into the future. No other business or government agency has such a requirement. The USPS won’t actually spend the money it puts away for “pre-funding” until many years from now. Yet it counts as a loss on its balance sheet today.
The pre-funding payments come from money the Postal Service earns. The Postal Service is a self-supporting agency that operates with money it makes on sales and service–like selling stamps and shipping packages. It hasn’t used a dime of taxpayer money in a quarter century.
Fortunately, the Postal Service has a surplus in another fund that it could use to make these unusual pre-funding payments if they continue to be required. Congress should allow the USPS to make that internal transfer of its own money, so the agency can stop depleting its operating budget.
The Postal Service and its employees, including the letter carriers I represent, have worked hard to meet the challenge of the recent economic disaster, which drove mail volume down, though it’s now increasing for the first time in four years. The Postal Service is becoming increasingly efficient and is taking advantage of new business opportunities to deal head-on with competition from the Internet.
As a result of those efforts, it’s performing well financially.
The health care pre-funding payments began in 2007, and the USPS has diverted $20.8 billion for pre-funding since then. Absent these payments, the Postal Service has earned a profit of $837 million since 2007. How many private businesses had the same performance, especially through the worst recession in 80 years?
Looking forward, the Postal Service has enormous potential to grow. It’s the only nationwide communications network. And it reaches every address in the country six days a week. For six years in a row, the public has rated us the most trusted federal employees. The USPS should be expanding its business, not shrinking it. Cutting a day of delivery would only cause it to lose customers while inconveniencing millions of people–from small business owners to residents of rural areas–who depend on us to deliver essentials like financial documents and medicine on Saturdays.
President Barack Obama’s budget maintains six-day delivery and takes a step in the right direction toward addressing the pre-funding issue. Let’s hope Congress goes along, and that USPS managers get back to growing the Postal Service and helping meet the needs of an evolving society.