Monday, August 22, 2011

Postal Service to be Insolvent

In a matter of weeks, the USPS will have to default on a health benefits payment, after reaching its borrowing limit of $15 billion and after losing over $3 billion in the past quarter.  The postal service has asked Congress to make several major changes to the postal system, including eliminating Saturday service. 

The USPS has been having problems for years now, and many people are quick to point to the rise of e-mail and the Internet, as well as the growth of UPS and FedEx as primary causes for this.  I agree, but I believe there are a couple of other reasons that are at least, just as important.  One is rising fuel prices.  As peak oil starts to hit us harder, many governmental services (as well as private companies) will be more and more unsustainable, since they were built and organized under the assumption that cheap, accessible fuel would never be an issue.  Say what you will about rising stamp prices, but 44 cents to deliver a first-class letter from one end of the country to the other is still a bargain, especially in the age of $4 gallon gasoline.

Another reason brings me to something that, until around a week ago, I never knew.  The USPS is a federal service in name only.  Their revenue consists of the sales from postage and other products.  They receive no federal funds.  The Postal Reorganization Act, which turned the USPS from a cabinet department into a quasi-independent agency, was signed in 1970.  So, this is an example of free market worship run amok, and you can't blame the usual culprits for this (Reagan), since this goes back even earlier.

I think that postal service is an essential service of the government, right up there with providing defense.  It was even written in Article One of the Constitution.  But, as we all should know by now, the "free market" surpasses everything, even the Constitution.   

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