Postal service

The bailout of the postal service backdoor

TToday, packages make up about 6% of the mail carried by the United States Postal Service, but
40% of its turnover and almost all of the growth

The postal service spends billions on
trucks designed to receive parcels
as well as regular mail delivery, eliminating billions of dollars in mail processing equipment to make way for more parcel processing and
modify its delivery methods and times
develop its parcel delivery business.

Parcel delivery and regular mail delivery charges are supposed to be separate. The delivery of first class mail is considered essential and enjoys monopoly protection, but business enterprises are expected to pay their way or gradually disappear. The postal service avoids doing this, so we don’t know if the parcel business has been profitable.

What we do know is that parcel revenue increased by $ 3.9 billion this year compared to last year thanks to online shopping induced by the pandemic. But the Postal Service has lost another $ 6.9 billion and expects to lose $ 160 billion over the next decade. It faces even more expenses, for new trucks, mail processing centers and equipment, and new employees, to accommodate the emphasis on packages.

The volume of first-class mail, the Postal Service’s most profitable product, has fallen by about half since 2006. But rather than downsizing to reflect this, the Postal Service has decided to put everything in competition with certain companies. most efficient businesses in the world – which would be great if people weren’t responsible for its business decisions.

But we are.

The Postal Service blames its woes on the requirement that it pre-fund retirement benefits. The Postal Service has one-fifth of all federal employees and one-quarter of all federal annuitants, and although it does record payments to fund future retirement benefits on its balance sheet, it has not made such a payment since. 2010.

The plan, which is part of postal reform legislation currently before Congress, would move postal service retirees into the Medicare system, which itself is $ 50 trillion or more behind. to what he’s supposed to have for the next 75 years. Postal workers who have paid premiums for health care and retiree pensions throughout their careers would be required to enroll in Medicare Part B and pay premiums of up to $ 1,500 per year for insurance they assumed they had already paid for.

Worse yet, Part B premiums are lowest for those who join at age 65 and increase by 10% per year thereafter. For example, a 70-year-old postal retiree would have 50% higher premiums if he hadn’t chosen insurance he didn’t need five years ago.

Under the plan, taxpayers would shell out $ 46 billion to transfer postal retirees to Medicare – just weeks after lawmakers passed a complicated process to raise the debt ceiling because the The alternative included cuts to Medicare, whose hospital trust fund is now on track. go bankrupt in 2026 unless Congress intervenes.

Such cuts would lead to dramatic cuts in services and the closure of some hospitals. Forcing over a million postal workers and retirees into the system will make it even more difficult for Medicare to stay solvent and provide the services its customers rely on, especially as everything is done to meet the desire of the Postal Service – there is certainly no need – to be a leading player in the parcel delivery industry.

And it’s not just about destroying medicare. Parcel delivery is inherently less efficient given the strengths the postal service already has – significantly more mail can be processed and delivered in any given day than parcels.

The Postal Service understands these factors but keeps them quiet so they can keep parcel delivery prices low to compete with the giants and pay them with multiple rate increases a year on the first class mail we all depend on.

A provision in Maloney-Comer’s postal reform law, now filed until next year, would require it to maintain an “integrated network” for mail and parcel delivery – i.e. a cost-shared network, which would give the postal service an almost unlimited capacity to get its first-class mail customers to pay for its entry into the parcel business.

There is a place for the delivery of parcels within the Post Office, and it is indeed required by law to deliver the parcels. Its delivery network, the most comprehensive in the world, is itself a national asset and lends itself well to last mile delivery for other carriers. Indeed, this represents half of the parcel activity of La Poste.

But when you change your business practices to accommodate an unproven product line and want to go to the point of requiring retirees who have paid for health coverage to buy even more, then the postal service reform plan may have need a little more work.

Brian McNicoll, a freelance writer based in Alexandria, Virginia, is a former senior writer for the Heritage Foundation and former director of communications for the House Committee on Oversight and Government Reform.