U.S. Postal Service Must Streamline
May 10, 2011
Nearly forty years ago, on July 1, 1971, the Post Office Department evolved into the United States Postal Service (USPS), a federal but independently operating entity that sustains itself with no direct support from taxpayers. To cover years in which it operates at a deficit, it has a $15 billion credit line with the U.S. Treasury, says Greg Beato, a contributing editor at Reason Magazine.
- In 2006 the USPS processed and distributed 213 billion pieces of mail.
- By 2010 that number had dropped to 170 billion, and according to forecasts commissioned by the USPS, the total will sink to 150 billion by 2020.
- In March 2010, postal administrators announced that the USPS could run up a cumulative deficit as high as $238 billion during the next decade.
To cut expenses in the face of eroding revenues, the postal service floated the idea of reducing delivery to five days a week and stepped up its efforts to shutter underperforming post offices and branches. This year, it hopes to close as many as 2,000 of its approximately 32,000 outlets.
- Closing a small-town post office, or even a couple thousand small-town post offices, isn't going to put much of a dent into the $8.5 billion deficit the USPS recorded in 2010 or the $3.8 billion deficit it racked up the previous year.
- The postal service's most pressing fiscal crisis arises from a provision in the 2006 Postal Accountability and Enhancement Act that requires it to prefund its Retiree Health Benefits Fund at the rate of approximately $5.6 billion a year from 2007 to 2016; the agency has not been able to make those payments without running up huge deficits.
If the USPS wants to maintain its self-sustaining status in the face of declining demand for its most lucrative monopoly, first-class mail, it must shed personnel, streamline infrastructure and cut services, says Beato.
Source: Greg Beato, "The Post-Postal Society?" Reason Magazine, May 2011.
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