The plot to sell off the postal service

Dean Baker with some info I didn’t know:

The Washington Post, along with most other news outlets, reported without comment that the United States Postal Service (USPS) lost $15.9 billion last year. Some comment would have been appropriate since almost 70 percent of this shortfall is due to a payment of $11.9 billion to the postal workers’ retiree health fund.

This is noteworthy because Congress has required that the Postal Service prefund its retirement fund at a level that has no match in the private sector. It also mandated that it build up to its targeted prefunding level in just 10 years making the burden much greater. In addition, the USPS is required to invest these funds, as well as its pension, exclusively in government bonds. In contrast, private sector competitors like UPS invest largely in equities which provide a much higher return on average. The result is to place an enormous burden on the Postal Service putting it at a serious competitive disadvantage. (Here’s more on this one.)

Congress has put the Postal Service in an impossible situation. It has imposed restrictions, like the requirement that all assets in its pension and retiree health fund be invested in government bonds, that substantially raise its costs relative to competitors. It has also prohibited USPS from getting into new lines of business that take advantage of its resources in order to protect private sector companies from competition. However it still expects the USPS to be run at a profit.

Clearly the Post Service would face difficulties in any case as technology has led to a shift away from first class mail, the system’s main source of revenue. However the restrictions that Congress imposes makes it impossible for USPS to adjust to changing economic conditions.

So the reason the USPS can’t compete with the private sector is that a Republican Congress passed a law preventing them from doing so. Got it? So much for “running government like a business,” huh?

6 Responses to The plot to sell off the postal service

  1. imhotep February 8, 2013 at 10:44 am #

    Along with all the other lies that the Republicans tell the one about supporting the Constitution may be their biggest lie. Article I, Section 8, Clause 7 of the Constitution directs the Congress to “establish post offices.” The Republicans don’t have a problem with post offices per se. They do have a problem with unionized post offices. This game is all about breaking the union and driving down our standard of living.

  2. jawbone February 8, 2013 at 12:27 pm #

    I came here to bring up the Constitutional requirement to have postal service, but Imhotep beat me to it.

    Now, why isn’t the Constitutional angle mentioned more often? By, say Dems and the Dem prez??

  3. jawbone February 8, 2013 at 12:27 pm #

    Oh, yeah, bcz the R’s and D’s are two wings of the same lumbering oligarchy.

  4. lless February 8, 2013 at 1:01 pm #

    And what makes the Post Office such a rich target for private takeover? The Congressional mandate to overfund a defined benefit pension just cries out for private equity looting.

  5. Ron February 8, 2013 at 6:29 pm #

    I had an argument just yesterday with someone on this very issue. Apparently, no one in the US at large is aware that Republicans set the Post Office up for failure. Due in large part I’m sure of media completely ignoring that fact. Why worry their poor little heads over how this happened.

  6. Not Anonymous, though may as well be February 9, 2013 at 12:52 am #

    Yet Anothe Nasty Bipartisan Affair.

    Not exactly sure when it became a such a blatantly bipartisan affair but it certainly is one. The fact that despicable Dianne Feinstein and her vampire squid husband have not been loudly and clearly condemned is stunning, as this has been known for quite some time. How her husband’s company received what seemed to be a thoroughly behind closed doors to the public owners, illegal contract, without congressional rage, says it all:

    02/06/13 A Bronx Cheer for the Postal Service: The Fire Sale of Historic Post Offices Continues

    “The privatization of the public realm

    The Postal Service’s exclusive real estate agent on sales and leases is CB Richard Ellis, the world’s largest commercial real estate company. The Chairman of the Board is Richard Blum, husband of California Senator Feinstein. That has all the appearances of a conflict of interest, but that doesn’t seem to matter to anyone in our nation’s capital.

    One can only imagine how much money Blum and CBRE are making off the sales. The USPS properties on the CBRE website average $1.6 million. Selling off 600 properties could bring in a billion dollars. The details of CBRE’s contract with the Postal Service are unknown, but even a one percent commission would mean $10 million for CBRE.”

    (By the way, that website is a good place for Post Office News, since much of the internet/tech world seems to care less, much like printed books.)

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