Get ready for the Postal Service bailout


The latest jackpot winners in Bailout America are employees of the U.S. Postal Service, which might have once again escaped serious reform, instead getting a $34 billion taxpayer bailout from the Senate.  According to a Fox News report, “House Republicans call the Senate bill a joke, a special-interest spending binge that does nothing to reform an agency losing business every day, as more and more Americans use e-mail and electronic banking.” 

The House has been promoting a far more serious and far-reaching reform plan, the Issa-Ross Postal Reform Act.  To illustrate just how much of a joke the Senate postal bailout is, the comedians at House Oversight uploaded YouTube video of Senate Majority Leader Harry Reid explaining why seniors “love junk mail,” because it’s “sometimes their only way of communicating, or feeling they’re part of the real world.”

The quest for compromise between the two chambers of Congress is under way.  The Postmaster General has plans to save $20 billion, which would require the USPS to “close more than half of its mail processing centers, eliminate 28,000 jobs, end overnight delivery of first-class mail, close 3,700 local post offices, and end Saturday delivery.”  The Senate is preventing him from carrying out these plans.  A moratorium on post office closures is due to expire on May 15.

The Issa-Ross plan, sponsored by House Oversight chairman Darrell Issa (R-CA) and Rep. Dennis Ross (R-FL), has its own website, which details both the extent of the postal crisis, and their proposed solutions.  Last month, the House proposal picked up the endorsement of the Washington Post, which pointed out that declining mail volume, excessive costs, and business practices calcified by government regulation of this quasi-independent service would produce $21 billion in annual red ink by 2016:

If the postal service were a private company, its shareholders would be clamoring for it to get on with the restructuring, pronto. But USPS answers to Congress, which gets lobbied by “stakeholders” – i.e., special-interest groups – that benefit from the status quo. And so, as the GAO report points out, “stakeholder issues” stand in the way of necessary action.

Business mailers fret that eliminating mail processing centers could raise their costs; ditto various publishers. The fact that, without reform, the costs would get shifted to someone else, quite possibly taxpayers, seems not to trouble them. Postal unions cling to contracts that require only modest employee contributions to health care, make it essentially impossible to lay off many workers and forbid transferring employees to new jobs more than 50 miles away. Last, but not least, members of Congress defend their districts’ postal facilities, no matter how underutilized or inefficient.

The postal crisis has been brewing for a long time, as institutional inertia combines with public nostalgia to maintain a system that simply does not fit into the modern world.  It’s always a little sad to watch the laws of supply and demand sink their teeth into a storied institution.  There will always be plenty of vested interests clamoring for the government to seize the hands of the clock, and stop time from marching on… while the wheels of various gravy trains are kept rolling. 

It’s a shame the American voter was willing to authorize the waste of so much money in 2008 for a fresh lesson about the failure of politically managed industries.  A fine example already awaited their inspection.