With all the information floating around about the U.S. Postal Service's financial crisis and the possible Postal Service default at the end of September, it can be difficult to wade through what is fact and what is fiction. Below are 8 Myths about the current crisis and 8 facts explaining what can and must be done to reform this vital American institution and ensure its services remain for generations to come.
- MYTH #1: The U.S. Postal Service is bankrolled by taxpayers.
- MYTH #2: The U.S. Postal Service will inevitably see a total financial collapse in the coming months.
- MYTH #3: Congressional action to save the U.S. Postal Service amounts to yet another government bailout of a failing industry.
- MYTH #4: Allowing the U.S. Postal Service to default will simply force much-needed restructuring and reform.
- MYTH #5: A new government control board could better take the dramatic steps necessary to fix the U.S. Postal Service.
- MYTH #6: A new government commission - similar to the Base Realignment and Closure (BRAC) Commission - could help the U.S. Postal Service close or consolidate unnecessary processing and retail facilities free from political pressure.
- MYTH #7: The U.S. Postal Service must raise rates on certain postal products to help cover its losses.
- MYTH #8: Sen. Carper's bill - the POST Act - wants to end Saturday mail delivery.
- MYTH #1: The U.S. Postal Service is bankrolled by taxpayers.
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FACT: The U.S. Postal Service funded entirely by revenues from postage.
According to the U.S. Postal Service, "The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations."
Additionally, CNN Money reported in August 2011: "The Postal Service supports itself on sales of postage and mail services, and gets no taxpayer funding. But with fewer people using mail services, revenue is free-falling. Last quarter, the U.S. Postal Service posted a loss of $2.2 billion."
return to top - MYTH #2: The U.S. Postal Service will inevitably see a total financial collapse in the coming months.
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FACT: Congress and the Obama Administration have the ability to empower the U.S. Postal Service to operate more like a business by giving postal management more control over decisions about its financial well-being. We can prevent this from happening; but if nothing is done to address the current constraints on the Postal Service, it will default on its retiree health payment at the end of this month, struggle to make payroll and meet other key financial obligations this fall, and be insolvent by August 2012, if not sooner.
The lede of a New York Times story on September 4, 2011, framed it this way: "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."
return to top - MYTH #3: Congressional action to save the U.S. Postal Service amounts to yet another government bailout of a failing industry.
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FACT: Under current law, Congress has prevented the U.S. Postal Service from making many tough but necessary business decisions on topics ranging from the number of post offices to the frequency of mail delivery. Congress now must stop micromanaging the Postal Service and allow critically important reforms to modernize the Postal Service and to streamline its operations. We don’t need to bail them out; we need to let this invaluable U.S. institution act like a real company and save itself.
An editorial in the New York Times on August 29, 2011, put it clearly: "Congress allots no money to support the service. But lawmakers control its practices - particularly in shooting down repeated requests to eliminate costly Saturday mail deliveries. ... Congress needs to surprise the country and mount a swift and serious debate and then pass a reasonable menu of reforms. Americans want their lawmakers to work for the common good. And they want their mail delivered."
return to top - MYTH #4: Allowing the U.S. Postal Service to default will simply force much-needed restructuring and reform.
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FACT: Allowing a default would jeopardize our already fragile economic recovery and endanger the jobs of over 7 million employees in the mailing industry who depend on a healthy U.S. Postal Service, despite what reform may come after a default.
In a 2008 report, the Envelope Manufacturers Association said: "The mailing and delivery industries continue to be associated with a significant number of jobs in the economy. ... [T]he 8.3 million jobs identified here are the core of a larger industry footprint. The industry also creates jobs through the purchases of the businesses that employ these 8.3 million workers as well as the personal purchases of these employees. An examination of Department of Commerce economic impact factors for the printing, advertising, Postal Service, and paper industries suggest that mailing industry businesses and employees together generate at least an additional 3.2 million jobs in the economy…. over 2.1 million jobs can be identified in firms that deliver mail or parcels, produce mail, or supply these firms. An additional 2.5 million jobs are in mail related occupations in firms that are not classified in an identifiable mail-related industry."
return to top - MYTH #5: A new government control board could better take the dramatic steps necessary to fix the U.S. Postal Service.
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FACT: Congress already has the ability to give the Postal Service the authority it needs to make difficult - but likely necessary - decisions to streamline and modernize its business model, including reducing the future number of people it employs, the number of offices and distribution centers it operates, and the frequency of mail delivery. Creating a new government panel to make the kinds of tough decisions that Congress has thus far avoided would be costly to taxpayers, time-consuming, and could take potentially unconstitutional steps like breaking existing union contracts.
A recent CNN Money article highlighted the potential constitutional issues surrounding actions aimed to reduce the Postal Service’s financial obligations related to its workforce: "Layoffs can't happen unless Congress steps in -- and they could, in fact, violate the Constitution."
return to top - MYTH #6: A new government commission - similar to the Base Realignment and Closure (BRAC) Commission - could help the U.S. Postal Service close or consolidate unnecessary processing and retail facilities free from political pressure.
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FACT: The creation of a new commission only reinforces congressional micromanagement of the U.S. Postal Service and keeps it from being able to decide for itself, like any other business would, where and when to open or close retail locations or distribution centers.
Kate Muth, a former vice president for the Association for Postal Commerce, once wrote an op-ed for their website entitled, "Congress should stick to oversight and avoid micromanagement." In it, she said, "While oversight is necessary -- especially when the entity being reviewed is a government entity with monopoly rights -- meddling provides little value and micromanagement is downright dangerous. Unfortunately, it appears that Congress is heading from oversight to meddling, with a threat of micromanagement. I find it frustrating that Congress thinks it knows better than the Postal Service how to operate its business."
Additionally, financial journalist Felix Salmon wrote for Reuters.com on September 6, 2011: "Congress is micromanaging the Post Office, telling it how much it can raise postage rates, telling it that it can’t offer financial services (despite its huge business in money orders), telling it that it can’t get into all manner of other businesses either and telling it that it has to deliver mail on Saturdays. Astonishingly, amid all these rules and regulations, the Post Office is losing billions of dollars."
return to top - MYTH #7: The U.S. Postal Service must raise rates on certain postal products to help cover its losses.
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FACT: The U.S. Postal Service needs the freedom to choose the best way to close their revenue gap and get back on a stable financial track, and raising rates could jeopardize the revenues they continue to take in on valuable products like magazines and catalogs.
In his September 6, 2011, testimony before the Senate Homeland Security and Government Affairs Committee, Postmaster General Patrick Donahoe said: "Market-dominant, or mailing services, refers primarily to First-Class Mail, Periodicals, and Standard Mail. Rate increases for mailing services products are tied to a price cap applied to each mail class based on the Consumer Price Index – Urban (CPI-U). Market Dominant products account for about 90 percent of Postal Service revenue. ... The Postal Service has repeatedly sought the flexibility to price according to market conditions, in order to maximize revenue. We believe the prices of market dominant products should be based on the demand for each individual product and its costs, rather than capping prices for each class at the rate of inflation, although an appropriate degree of regulatory oversight remains necessary. This action would help the Postal Service ensure that products cover their costs."
return to top - MYTH #8: Sen. Carper's bill - the POST Act - wants to end Saturday mail delivery.
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FACT: Sen. Carper’s bill gives the U.S. Postal Service the freedom to establish its own calendar for delivery, free from top-down, prescriptive government mandates on postal delivery service. The enactment of a provision like this would be especially necessary if the Postal Service is unsuccessful in working with its two letter carrier unions during the collective bargaining process in the coming months in making Saturday delivery more cost-effective.
Section 205 of the POST Act states: "Notwithstanding any other provision of law, the United States Postal Service shall exercise its authority under section 3691 of title 39, United States Code, to adjust the frequency of the delivery of market-dominant products."
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