The coming bankruptcy of the United States Postal Service

“Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”

However incompetent management, Gold plated with platinum union contracts and email have driven the USPS, more commonly known as the post Office to the point of bankruptcy.

The post office has been on the cusp of financial failure for years. Now, it has reached the point that complete failure and shutdown may happen this winter. There’s a story in the NY Times, by Steven Greenhouse reporting that the Postal Service is close to default. If this happens, there is a good chance the USPS could shut down.

Frankly, this would be a good thing. The post office is a classic example of an out of control agency that won’t adapt to the times.

From the NY Times:

Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.

This isn’t a surprise. Why should you pay to send a letter that will take several days to get to its destination when you can pay essentially nothing to send an email that will arrive in seconds? In my case, I probably save $3-$5 dollars a month by doing electronic banking. Businesses can send contracts and other documents via email and save a huge amount of money. It’s actually very rare to use “snail mail” for business.

“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”

And there’s the first resort of the typical bureaucrat. Hit up the taxpayers.

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include ((USPS Workforce optimization, .pdf)) eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.

A no-layoffs clause? No layoffs? As someone who has been laid off several times in my working life, I find this disgusting. No privately held company would agree to such a clause, but then they can’t extort money from the taxpayers. I will salute Mr. Donahoe for taking the bull by the horns and ignoring this clause. You know that the unions won’t take this lying down. It’s a certainty that the Unions will run to one of their pet judges and force the USPS to keep these people.

The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the agency’s predicament on Tuesday.

Well this will be a complete waste of time. Why?

Feuding Democrats and Republicans in Congress, still smarting from the brawl over the federal debt ceiling, have failed to agree on any solutions. It doesn’t help that many of the options for saving the postal service are politically unpalatable.

What are these unpalatable solutions? The article doesn’t say, but I would bet it is raising the prices of stamps again and cutting wages and benefits. Personally, I don’t think raising the price of stamps is going to work. More and more people are moving away from first class mail. The alternative is raising the prices of third class, (Junk) mail and packages. Again, I don’t think this will work. Sending out flyers via third class mail really doesn’t work very well and there are alternatives to shipping packages. That leaves layoffs.

The post office’s powerful unions are angry and alarmed about the planned layoffs. “We’re going to fight this and we’re going to fight it hard,” said Cliff Guffey, president of the American Postal Workers Union, which represents 207,000 mail sorters and post office clerks. “It’s illegal for them to abrogate our contract.”

Time to join the real world Cliffy. If there’s no money to pay for your exorbitant contracts, it doesn’t matter what a judge says. Of course, there appears to be another alternative, but no doubt you’ll hate this one as well. It looks like the USPS overpaid into the pension plans to the tune of around $60 billion dollars and they want to get it back. Of course,

The Obama Administration has signaled discomfort with the pension proposals, questioning whether the postal service really overpaid.

The USPS has been mismanaged for decades. They never saw the internet coming and when it did, it blindsided them. This has given rise to an internet hoax ((Email surcharge hoax)) that a bill was being proposed to force people to pay $0.05 per email sent. Of course, if they could figure out a way to actually do this, you know they would. 😉

So, what to do? None of the options are good, but first and foremost, the unions need to be brought to heel. Disbanded would be the best thing. Also, the USPS needs to move fully into the free market and stop relying on congressional handouts. The other services, UPS, FedEx, Purolator, etc all make money and I know that UPS is also unionized.

Will this happen?

When pigs fly.

As the NY Times article stated, the political will to do what is needed just isn’t there. The Democrats first instinct is to protect their union moneybags and screw over the taxpayers. If they could get away with it, they would outlaw and shut down the private sector shipping companies. The Republican would cut jobs and completely overhaul the entire compensation system. Considering the mess that is, it wouldn’t be a bad idea. Why do I say this?

Again, from the NY Times article:

Decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

Yep, once again Unions are killing the goose that lays the golden egg. Since this is a government agency, their first thought is to loot the taxpayers. If they really want to overhaul the USPS, the first thing that needs to be done is getting rid of these unions.

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~The Angry Webmaster~

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