The Default of the USPS
While Americans spent Wednesday declaring their love for Chick-fil-A, the United States Postal Service defaulted on $5.5 billion in obligations for retiree benefits. The payments were required for the postal service to stay on top of its long-term obligations, but will not impact its present operations.
Like many government agencies, the USPS is burdened by the lavish benefits it showers upon employees. Numerous reforms which are purported to be able to save the postal service have been proposed, ranging from reducing the number of days it delivers mail, to replacing its network of post offices with kiosks in convenience stores.
Regardless of what reforms are needed to ensure either the viability of the USPS or the improvement of mail service in this country, they will not be able to be made until congress casts off the shackles currently holding down this industry. It is ridiculous for the United States Congress to be expected to act like a “Board of Directors” for a firm that is competing in the market.
The real issue is the lack of autonomy and flexibility the USPS has. Closing branches, reducing the workforce, raising prices, and changing delivery schedules all require congressional approval. Despite being shielded from direct competition, the USPS must compete with other methods of communication and shipping from both the internet and private postal carriers. The postal service’s inability to alter its business model or modify almost any aspect of its structure without congressional approval all but guarantees that it will be blown away by competitors offering similar products. This is compounded by the fact that congress is afraid to make any changes, no matter how necessary, until after the election in order to avoid closing branches while voters are still deciding for whom they will pull the lever.
The first thing the government could do to improve postal service as a whole in this country would be eliminate the USPS’s monopoly on the delivery of first class mail. Even if the USPS were to continue down the path towards insolvency, the plethora of private mail carriers could do our dirty work. Forcing the USPS onto a level playing field with private operators and removing its governmental financial backing would force it to sink or swim. A nationalized mail service may have been necessary to ensure a functional national debate, but advances in technology and increased competition have rendered the organization obsolete. Politicians always hate to let a crisis go to waste, so here is our opportunity to use the postal crisis to ensure better and more fiscally prudent mail service.