Christmas is typically the Post Office’s strongest quarter, financially. Even though package volume increased by 7% this year, it still wasn’t enough to offset 5% losses in mail.
In fact, the Post Office has already lost $540 million in 2018.
Postmaster General and CEO Megan J. Brennan even announced that without making changes, the postal service won’t survive.
The US Postal Service is a failing government agency, a dysfunctional monopoly that continues to sink into debt and drain taxpayer dollars.
Why? Because of…
- The Postal Bureaucracy
- Hostility and ignorance from all of the above about the importance of direct mail used by thousands of businesses
Here are 6 frightening realities about the Post Office…and what must be done to save taxpayers from a massive bailout and make mail delivery great again.
Reality #1: The United States Postal Service (USPS) has lost $65.1 billion…that’s right, billion…in the last ten years.
The Post Office is reporting $2.7 billion in losses over the last year, less than $5.6 billion from the previous year…but still a massive loss that taxpayers will have to pay for.
The huge, inefficient, corrupt bureaucracy did not make any payments of the $6.9 billion due to the government in unfunded pension and benefits liabilities.
In fact, the Post Office has lost money every year for the last 11 years. Why the massive debt?
Here are just a few reasons:
- The USPS massively undercharges for package delivery….in fact, they would have to raise their average rate by 40%, or $1.40, to accurately reflect the cost of delivery. And, package delivery is increasing…up 16% in 2016.
- First class mail actually earns the Postal Service greater revenue, but the volume of first class mail has dropped 40% from 2000.
- The Post Office has prefunded 75 years-worth of retiree health benefits…the result of misguided and poorly planned legislation.
The whole system is unsustainable, but the Post Office keeps doing things wrong.
Reality #2: The Postal bureaucracy is archaic, resistant to change.
Overstaffed, fighting automation, and backed by resistance from powerful postal worker unions, the postal bureaucracy has become wasteful and inefficient. They make decisions not based on market need and business reality, but what pleases bureaucrats, unions, and politicians.
Proposals to introduce mail delivery by drones and driverless cars have been shot down—because of unions. Although the USPS desperately needs these cost-saving changes, unions have fought to keep the post office inefficient…because it benefits them.
Reality #3: The Postal Service is a government-protected monopoly in need of competition.
Although the USPS has competitors in the package-delivery industry, it still has a public monopoly over letter delivery, for reasons that remain unclear.
In a free economy, the best competitor wins. If the Post Office was the best at delivering mail, it would gain a natural monopoly. But this archaic and inefficient government agency hasn’t had to prove itself to be the best because there are no natural competitors.
The USPS monopoly is costing the government billions of dollars a year. With privatization and a growth of competition, we might see improved mail delivery…and reduced spending.
Reality #4: The Post Office is Discriminatory and Irrational in its Pricing – Amazon is Given Artificially Low Rates…Losing Even More Money.
The Post Office monopoly is using its power to give special favors to Amazon. All of the other private delivery companies and Amazon’s competitors have to pay higher rates.
Amazon’s competition doesn’t get special rates.
For example, the Post Office charges Amazon roughly half of what its competitors would charge Amazon—proving the reality that government agencies make political decisions, not decisions based on the free market.
FedEx, UPS, and other private delivery companies can’t compete.
And now, Amazon plans to launch its own delivery service, called “Shipping with Amazon”….making it even more difficult for the Post Office to profit, and for competitors to succeed.
Because of this, the Post Office is about lose even more revenue.
Reality #5: The Postal Service has increased postal rates…bad for thousands of businesses—and sending its revenue even lower.
The Postal Service’s solution to its massive debt is to hike up rates 34-41% over the next five years…without approval from Congress.
Only a government agency can increase rates independently, without responding to the market- an inefficient and expensive move that benefits the agency and hurts consumers.
But commissioners of the Postal Service have decided to override the law’s inflation rates…ignoring the principles of the free market.
The rate hike included the following measures:
- The usual rate increases that are tied to changes in the Consumer Price Index will continue (anticipated at 2.05% over the next 5 years).
- An additional 2% increase has been added to rates of all “market-dominant” mail, including First Class and Standard mail.
- Furthermore, an additional 2% increase has been added to mail that doesn’t cover its own cost (including many newspapers and magazines).
- Another 1% increase over the next 5 years will occur if the Post Office can meet specific efficiency and service goals.
Once compounding occurs, these rates may add up to an overall 34-41% increase, depending on how well the Post Office meets its goals.
These price hikes aren’t permitted under the 2006 Postal Accountability and Enhancement Act, which is the major law that governs the Postal Service.
This colossal increase in prices is now hurting thousands of small and large businesses who rely on direct mail, and also hurt magazines and newspapers.
Reality #6: The solution to the USPS mess is competition and choice.
The USPS is hurting the American economy and jobs….and it’s hurting taxpayers.
Trump has gotten a good start by nominating three new individuals to the Board of Governors, which has been in desperate need of new leadership.
But there’s still more to be done.
Here are further steps President Trump must take so that everyone wins:
- Work non-stop and quickly to make changes. Ignore the bureaucracy, unions, and politicians.
- Roll back the hiked postal rates.
- Fire bad personnel and downsize departments.
- Appoint staffers and hire workers who understand business, competition and job creation.
- Change the dysfunctional rules.
- Privatize key functions of the Postal Service, end the monopoly, and stop the waste.
Not only is the United States Postal Office going bankrupt, but their wasteful incompetence and abuse are hurting business owners, consumers, and jobs.
There can be no delay. Trump needs to act now and Make Postal Delivery Great Again, or at least tell the Government monopoly: “You’re Fired!”
Contact your representatives right now and tell them: “Reform the Postal Service now!”
Here are the rest of this week’s articles: