While privatization may offer some advantages in the long run, doing it now is neither politically tenable nor wise. To take the USPS private, Congress would need to find a consensus to sell off the country’s second-largest employer during the longest stretch of high unemployment in modern American history. Moreover, the Treasury is liable for post-employment benefits for federal workers. Supporters of privatization cite the $13 billion overfunding of the USPS’s pensions. But few mention the $46.2 billion in underfunded health benefits promised to employees, which no private bidder would ever agree to take on. Immediate privatization would leave taxpayers with yet another multibillion-dollar bill.
There are three successful precedents for change that we should consider. First, many national postal services have expanded and diversified their revenue by offering new competitive products, including global package delivery, logistics and freight forwarding. If it’s allowed to use its sizable revenue from first-class and standard mail delivery to invest in new and growing areas, the USPS can build revenue streams that will last beyond first-class mail.
Second, it is possible to deliver mail to everyone quickly and reliably at an affordable price. But this obligation must be coupled with competitive price adjustments and reasonable limits to delivery service. Postage rate increases are currently set by the Postal Regulatory Commission, whose commissioners are appointed by the president — not by the people who run the business. The USPS needs the authority to effectively cover its costs while preserving universal service.
After five years in the red, the post office faces imminent default this month on a $5.5 billion annual payment to the Treasury for retiree health benefits. It is projected to have a record loss of $14.1 billion next year amid steady declines in first-class mail volume. Donahoe has said the agency must make cuts of $20 billion by 2015 to be profitable. It already has announced a 1-cent increase in first-class mail to 45 cents beginning Jan. 22. "We have a business model that is failing. You can't continue to run red ink and not make changes," Donahoe said. "We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money." Separate bills that have passed House and Senate committees would give the Postal Service more authority and liquidity to stave off immediate bankruptcy. But prospects are somewhat dim for final congressional action on those bills anytime soon, especially if the measures are seen in an election year as promoting layoffs and cuts to neighborhood post offices.