Congress should stick to its role as a marginally competent board of directors and stop micro-managing the Postal Service into oblivion.
For 30 years, a meddling Congress has been driving the Postal Service from health into bankruptcy while ignoring the three major drivers of its collapse: Congressional mandates, defined-benefit plans for postal workers, and declining mail volume. Clean up the first two and the declining mail volume could be managed by competent executives and dedicated workers empowered to modernize and expand the system. I’ll suggest a cure that Congress can and should enact. For details of the financial situation I suggest reading “The Cost Structure of the Postal Service: Facts, Trends, and Policy Implications,” released July 20, 2011 by the Office of the Inspector General
Congress mandates unnecessary services. To subsidize special interests, it compels delivery of 2nd and 3rd class mail at a loss. It limits any increase in the price of stamps to the rate of inflation and ignores more rapid increases in operating costs such as transportation. In 2006, it mandated that the Post Office pay $5.5 billion each year into Federal coffers until 2020, ostensibly to pre-fund health care costs for the next 75 years. (Gross revenues for the post office were only $63 billion in 2011). This last piece of micro-management was passed unanimously by Congress. It should have been obvious to any member with a business background that this would accelerate a financial crisis while doing nothing to solve the long term issues of fiscal soundness. It did, however make Congress look better. Through the magic of bookkeeping, it reduced the Federal deficit by $5.5 billion each year!
Defined-benefit plans, like the health care benefits for retired Postal workers, are intrinsically unsustainable because Continue reading