Tuesday, September 06, 2011

Things Are Getting Better?

The NY Times ran the following in Monday's paper
US Postal Service Nearing Default as Losses Mount

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.
The idea of laying off 120,000 workers, closing 3,700 locations and eliminate Saturday delivery kind of makes you wonder. If there is a light at the end of the tunnel, what is it, another train? Congress is expected to fix it? I doubt it! This is the first time, in my lifetime, I can remember reading about something so dismal being suggested as a solution. The Post Office’s problems are directly related to the success of the Internet; email vs snail mail.

On Thursday President Obama will address us on jobs. I’m not sure what he will say. The Postal Service is an American institution, and needs our support like it or not. Government sponsored entities like Fannie and Freddie need to be cut off at the knees. Choices have to be made. And remember, an awful lot of people in California, haven’t made a house payment in two years. It must be nice to be so poor, to be that rich; "Let’s go to the Bahamas this year,Fannie Mae is paying."


Anonymous said...

While email has taken some of their business, is that really why they are going into default? Or is it that the retirement package that they promised does not have proper funding?

Why should workers fund retiree's income anyway? I certainly don't like the idea of paying for someone else not to work.

AIM said...

The USPS is collapsing because government doesn't know and never will know how to run a viable business. That isn't their proper role. Government is always reckless and irresponsible across the boards with taxpayer's money. Almost everything should be in the private sector. Our government has become a terrible model: fiscal and monetary insanity, outrageous debt, welfare, corruption, waste, etc.

The US government is your worst enemy.

Time for a new one.

Jim in San Marcos said...

Hi Anon 6:16

The Post Office use to be able to raise rates when needed to keep within their budget. Then Congress deemed it appropriate that postage increases couldn't exceed the inflation rate.

The Post Office has lost 22 percent of its business to email over the last 7 years, and they still have to drive the same route to deliver one letter instead of 10. Anybody notice what happen to the price of gas over that same time? Ask someone on Social Security what the real inflation rate is.

What is happening to the Post Office is real, why it is happening, is unreal. It's a catch 22 if I ever saw one.

Dan Mac said...

What is a "Catch 22" indexed for inflation in about 3 years?

Jim in San Marcos said...


I agree with most of what you say, but if private enterprise took over the Post Office, some remote areas would get no mail pickup or delivery, and if they did, it could be monthly, instead of daily.

The biggest selling point of the Post Office use to be that it was a pay as you go organization. They raised rates to cover costs.

Driving that one letter out 20 miles to that PO box connected the country. The US mail is still more dependable than email. I collect stamps and buy on line with ebay. I need the Post Office. Price is not an issue, dependability and reliability is the issue.

Jim in San Marcos said...

Hi Dan Mac

If you figure that a catch 22 is a problematic situation for which the only solution is denied by a circumstance inherent in the problem or by a rule, then there is no possible solution.

So if we index the whole mess for inflation, there isn't any (if you just got off the boat). Of course if you've been here a while, and are on Social Security, it's a different world, another catch 22 or more simply put a jar of Vaseline for what Congress does best.

Anonymous said...

AIM, do some research, the USPS is not your typical govt run program. It is run like a business, a very efficient one, and has been self-supporting without using taxpayer funds.

Jim in San Marcos said...

Hi Anon 10:41

I think AIM was frustrated looking at the whole package. Congress will take that one good apple and mess it up given time.

AIM said...

I stand corrected...
Actually I'll amend what I said to a degree. Communications (mail) is actually part of the essential infrastructure of our country and should be run by government and protected by federal law. If the government wasn't so out of line in all other aspects it would be able to maintain a strong and effective postal system.

I believe govmt should be small and stay out of our personal and business lives. It should be here only to maintain the basics, such as: communication, defense, rule of law, and a few other things to support Americans in attaining prosperity and building a strong and viable country. We've allowed government to go off the rails. What do you get when you allow that? A TRAIN WRECK... A DEPRESSION... A COLLAPSED EMPIRE.

GDI said...

Great article, but I do not believe for a second that the primary problem of the Post Office is competition from email. Instead, their primary problem is poor planning, overburdened salaries, too many workers, too many locations, benefits packages that are too generous, and retirement packages that are too generous. I believe the solution is to sell the US Postal Office to the overall best bidder and completely privatize it. Would there be fewer locations, fewer workers, etc? Yes, but the taxpayer would benefit greatly from privatization.

Anonymous said...

I worked for the post office in college. Once a year, each route is walked by a supervisor, along with the carrier. If route takes longer than 8 hours, the route is slashed, and some streets are moved to another route.
On this one day a year, you walk as is you were partially crippled. Take 10 hours, and your route is cut.
Result, over the years? I could do most routes in 5-6 hours.
Whenever someone was going on vacation, they would tell me:
"If you get my route, I take 9 hours to do it. Do not come in any sooner."

Jim in San Marcos said...


The taxpayers haven't had to anti up to help the post office--yet. Admittedly, there is that possibility.

Before the Internet, I used to spend $50 dollars a year on postage paying bills and what ever. Now, I probably spend $5 a year on stamps. We pay all our bills on-line.

As for privatization of the post office, it will never happen, the rural areas are not profitable for private enterprise to deliver to. The collective subsidizing of non profitable delivery areas by cost averaging from the profitable areas, makes the Post Office work.

I was more or less using the Post Office as a measuring stick to illustrate how bad things in the economy are. If we were in quicksand up to our hips, we could argue over the quality of the quicksand but we would have overlooked the real problem. There is a storm brewing.

Jim in San Marcos said...

Hi Anon 9:00

Years back I tried to get a job at the Post Office. The application is about 30 pages long (in my mind, it seemed like 50 but you know, how your mind tends to exaggerate as we grow older).

The funny thing was, you were a temporary employee for the FIRST 10 years (figure that out).

So the real question is, has Postal management figured out how to beat the union labor scale wages and cut costs? I am guessing that they have.

There is a lot to the job that is invisible to the average person. The postal carrier has to sort the mail before they deliver it. So when someone is sick, another employee will sort his mail and that package will be added to someone else's route.

There is no argument from me, that as you get good at it, it could become a 6 hour job. I myself, wouldn't be able to handle the boredom of such a repetitious task.

Thank you for your comments.

frakrak said...

ebay has been an economic boom for our postal service down under, never had so much business!

Read recently about a government run bank in Nth Dakota, that is bouyant and lending! Our own Commonwealth Bank was also government run and profitable, now (privatised) it is profitable but exposed to a lot of risk like all our major banks!! AIM could you extend your statement to some financial institutions also? :) Otherwise they all tend to end up socialised when they soil their balance sheets:)

Anonymous said...

I work for the postal service, and wait until you see the kind of funny accounting measures they will be proposing to "alleviate" their "situation". There is NO REFORMING what cannot be reformed, once the uSPS hit 80% costs being employee pay and benefits, it was all downhill from there.The problem is an inability to address the fundamental axioms of "reality". It's the same problem that lurks in every government agency, quasi-agency, and distant relative of an agency, including USPS. Like the witch-doctoring of midevil times, guaranteed, the cure will be worse than the disease.