THE POST OFFICE CONTROVERSY IS MORE ABOUT BAILING OUT A GOVERNMENT AGENCY THAN IT IS ABOUT THE ELECTION

There is nothing new about the reduction in public mailboxes. According to a 2009 Washington Post article, between 1985 to 2009, the number of the iconic blue mail collection boxes nationwide declined from 395,000 to 177,000. And in the years since, the number has declined another 20%, to 141,900 as of last year.

For decades, the Post Office has been slowly shifting away from letter collection, which has seen a 30% decline in demand over the last decade due to the rise of email, text messaging, and competition.

Nevertheless, the issue has been politicized in recent days by media and politicians claiming it’s a threat to the upcoming November election, and demanding the congress allocate billions to prevent disaster.

The reality, however, is that the public is being goaded into picking sides in a political battle over funding the Post Office. As Rahm Emmanuel once said, “Never let a good crisis go to waste.” And the coronavirus pandemic has provided just such an opportunity.

Here are the facts.

• THE USPS IS AN INDEPENDENT AGENCY.

In 1971, the Post Office was reformed to remove it from the direct control of the president. It has a Board of Governors that, although appointed by the president, is bipartisan. The Board appoints the Postmaster General, who reports to it.

However, most of its employees are unionized, and the unions are heavily Democratic. Its more than 600,000 people are organized by seven different unions. The largest postal worker union, The National Association of Letter Carriers, which consists of 300,000 workers, just last week endorsed Joe Biden.

• THE POST OFFICE HAS MORE THAN ENOUGH RESOURCES TO HANDLE MAIL-IN BALLOTS. Every year during the week before Christmas, the Post Office processes and delivers 2.5 billion pieces of first-class mail. That’s about 500 million cards and letters a day (not to mention packages), or about four times more in one day than the entire number of ballots (in-person included) cast in the 2016 election.

“From a sheer numbers perspective, none of the experts I spoke with doubted that the Postal Service could handle a vote-by-mail election, even if every one of the nation’s more than 150 million registered voters stuck their ballot in a mailbox,” Russell Berman writes in The Atlantic. “As one noted to me, a presidential election might be a big deal, but in postal terms, it’s no Christmas.”

• IT DOES NOT OPERATE ON TAXPAYER MONEY. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. USPS may request an appropriation for “public service costs” for up to $460 million annually. However, it has not requested or received this reimbursement since 1982.

• THE PROBLEMS AT THE USPS ARE NOT DUE TO A LACK OF GOVERNMENT FUNDING, BUT INSTEAD TO STRUCTURAL ISSUES EXACERBATED BY POLITICAL MANDATES. The aforementioned public shift away from first class mail has hurt revenues at the Post Office, but an increase in parcel delivery has helped offset it. But while private sector companies have been able to adjust and remained profitable, the Post Office has been stymied by ill-advised political mandates.

The USPS’s price increases on letters and junk mail, for example, are capped at the rate of inflation, meaning it cannot adjust its prices as effectively as its private sector competition.

Also, the Postal Service has billions in assets for retiree health care, but it’s barred from investing them except in U.S. Treasurys.

And a 2006 law compels the USPS to pay in advance for the health and retirement benefits of all of its employees, which has cost an estimated $55 billion over the next 10 years.

The USPS unions with their 600,000 workers have repeatedly pushed congress to stop most attempts at reform. In 2013 it quashed an attempt to save $2 billion a year by stopping Saturday delivery for regular mail, but not packages.

And Congress nearly always refuses to allow closure of even the least active post office branches for fear of angering constituents.

All of the above has led the agency to slide closer and closer toward insolvency with every passing year. In FY2019, the USPS reported an annual net loss of $8.8 billion, its 13th straight multi-billion dollar loss, and more than double the $3.9 billion loss in fiscal 2018. $3.5 billion of the loss came from an increase in workers compensation expenses. The USPS projects losses will continue “at accelerating rate.”

However, the USPS has enough liquidity to operate through the election and into next year, meaning it’s not the upcoming election that requires more funding, as politicians would have you believe.

Instead, politicians are attempting to lure the public into an existing political debate over whether the USPS should remain self-sufficient via badly needed structural reforms to address the above-mentioned issues, or whether it should essentially become another bailed out government program that relies on taxpayer funds.

And so far, the politicizing has worked. White House negotiators offered $10 billion for the Postal Service as part of their recent talks with Pelosi and Schumer over another COVID relief bill. Democrats want $25 billion in taxpayer funds, and Nancy Pelosi has called the House back into session to negotiate it.

Private sector shipping competitors, meanwhile, faced the same technological headwinds. But instead of just racking up losses, companies like UPS and FedEx have innovated, cut costs, and became more efficient… and managed to stay profitable, all while routinely outperforming the USPS.

SOURCES: https://about.usps.com/who-we-are/financials/10k-reports/fy2019.pdf
http://about.usps.com/who-we-are/financials/10k-reports/fy2018.pdf
http://about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf
http://about.usps.com/who-we-are/financials/10k-reports/fy2010.pdf
http://about.usps.com/who-we-are/financials/10k-reports/fy2007.pdf
https://www.macrotrends.net/stocks/charts/FDX/fedex/net-income
https://www.macrotrends.net/stocks/charts/UPS/ups/net-income
https://multichannelmerchant.com/operations/usps-net-loss-doubles-2019-package-volume-slightly/
https://www.wsj.com/articles/the-postal-service-and-the-2020-election-what-you-need-to-know-11597619119
https://www.wsj.com/articles/the-post-offices-problem-isnt-trump-11597360885
https://thehill.com/homenews/house/512320-democrats-plan-saturday-vote-to-prop-up-postal-service
https://www.vice.com/en_us/article/n7wk9z/the-post-office-is-deactivating-mail-sorting-machines-ahead-of-the-election
http://www.washingtonpost.com/wp-dyn/content/story/2009/07/24/ST2009072403875.html
https://www.smithsonianmag.com/smithsonian-institution/the-case-of-the-disappearing-mailboxes-14907467/
https://facts.usps.com/table-facts/
https://apnews.com/5d02ef9cbbeddb977200eb20d9acc019
https://thehill.com/homenews/campaign/512128-union-representing-postal-union-endorses-biden-citing-threats-to-usps
https://www.businessinsider.com/us-postal-service-delay-funding-crisis-mail-election-trump-explainer-2020-8
https://money.yahoo.com/usps-handles-500-million-letters-132504195.html
https://www.theatlantic.com/politics/archive/2020/08/how-postal-service-preparing-election/615271
https://medium.com/@nharpermn/stop-panicking-about-the-post-office-8bcd689b9601
https://about.usps.com/newsroom/national-releases/2019/1114-usps-reports-fiscal-year-2019-results.htm
https://www.uspsoig.gov/sites/default/files/document-library-files/2019/RISC-WP-20-001.pdf

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