NCPA - National Center for Policy Analysis


April 13, 2010

What happens when the government tries to operate like a business, only not really, asks Byron York, the Washington Examiner's chief political correspondent.  

Just look at the Post Office: 

  • Without serious reform it's set to lose $7 billion this year and $238 billion over the next 10 years, and a new report from the Government Accountability Office (GAO) says the Post Office's business model is "not viable" given current business conditions.
  • The report makes the Post Office sound like a government version of General Motors, if General Motors itself weren't already a government version of General Motors. 

Demand for snail mail has been falling in recent years -- the GAO notes that first-class mail volume has declined 19 percent since its peak in 2001 -- and though the Post Office has cut some staff, it hasn't done nearly enough to keep up, says York: 

  • The Post Office is supposed to pay for itself, but in recent years has been covering its losses by borrowing from the Treasury.
  • But now, GAO notes, the Post Office is nearing its $15 billion borrowing limit with the U.S. Treasury and has unfunded pension and retiree health obligations and other liabilities of about $90 billion. 

Labor costs are killing the Post Office, explains York: 

  • Wages and benefits make up 80 percent of its expenses.
  • About 85 percent of its employees are covered by union contracts, and many receive benefits beyond those of other federal workers. 

According to the GAO, union agreements force the Post Office to: 

  • Maintain more full-time employees than it needs.
  • Deny managers flexibility in assigning tasks, like having a retail clerk deliver mail.
  • Forbid the Post Office from outsourcing any city delivery routes.
  • Give about 500,000 employees total protection from layoffs.
  • Require the Post Office to pay a more generous share of employees' health and life insurance premiums than most other agencies. 

Source: Byron York, "Will Obama create the Post Office of health care?" Washington Examiner, April 13, 2010. 


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