U.S. Postal Service is too big to fail
Monday, September 30, 2013 5:00 PM
WINNEMUCCA - To stem the flow of red ink on its balance sheet, the postal service is looking at, once again, raising the price of a postage stamp.
The proposed 3-cent increase from 46 cents to 49 cents for a first-class stamp would, if approved, take effect in January.
The rate hike, postal officials said, is an effort to align revenue with expenses. The postal service posted a loss of nearly $2 billion during the second quarter of the 2013 fiscal year.
Postmaster General Patrick R. Donahoe, speaking before a U.S. Senate committee in September, described the postal service's financial condition as "precarious." Over the past two years the postal service recorded net losses of about $20 billion and defaulted on $11.1 billion in retiree health benefit payments to the U.S. Treasury.
Donahoe told senators that the postal service is pursuing a five-year plan designed to restructure the organization and return it to profitability. The plan will generate $20 billion of savings by 2017, including repayment of debt.
The clamor from the bleachers for privatization of the postal service follows every loss. But it's far from certain that any company can do it any faster, cheaper or make a profit.
Private industry isn't going to be interested in buying the fleet of vehicles or hiring the employees to make a mail run to Denio or Paradise Valley. Where's the profit in that? You think a 49-cent stamp is steep? Try $19.95 to get that birthday card to grandma in Imlay.
Look at the way rural telephone companies work. Public utilities law allows small telephone services to receive a subsidy for serving customers in farflung locations. It's simply not profitable to string up telephone poles or wire for a dozen customers. They couldn't stay in business without a subsidy or sky-high rates.
If you subsidize some private company to deliver mail to remote areas, what has been accomplished in the name of free enterprise and profitability?
Is the current structure of the postal service inefficient, a bloated bureaucracy? Well, by design it's big. The postal service guarantees that if you put a first class stamp it will get delivered. It has built a nationwide network of distribution and delivery, which, granted, has not been nimble in responding to changes affecting its finances.
Mail volume has gone down over the years, replaced by email and other technology. Expenses for retirees health care costs, which the postal service is forced to pay in advance, have gone up.
While it is overseen by Congress, the postal service isn't funded by taxpayers. Your tax dollars are not subsidizing the postal service. Your tax dollars did go toward bailing out the biggest for-profit banks on Wall Street a few years ago. The postal service, I would argue, is also "too big to fail," too important to rural America.
We in the newspaper business are vitally interested in the solvency and viability of the postal service because we rely on the many dedicated postal workers to deliver our product.
One day late doesn't cut it in the newspaper business. Subscribers count on getting a newspaper on time and when promised. It's a deal we cannot renege on.
When the postal service loses money and, subsequently, looks at trimming its operations further or restructuring, we take notice.
The postal service needs to contine to modernize and implement its plan to return to profiability. But the system works, and the fact that this newspaper found its way to your mailbox is testament to that.
So how much are you willing to pay for a stamp? Even at 49 cents, it's still a bargain in my book.
Steve Lyon is editor of the Humboldt Sun. Contact him at email@example.com.