Politics

Obama Throws U.S. Postal Service Under the Bus

| by Cato Institute

by Tad DeHaven

In a speech yesterday in defense of his health care plan, President Obama used an interesting analogy to dismiss criticism that the inclusion of a government-run insurance option could undermine private insurers:

“UPS and FedEx are doing just fine… It’s the Post Office that’s always having problems.”

Comparing the USPS with a proposed government-run insurance plan is probably counterproductive for the President’s aims. But making the analogy and deriding the government-run mail carrier — while acknowledging that private-sector UPS and FedEx are “fine” — provides some nice ammo for those of us who think the government should be less involved in both health care and mail delivery.

Now I understand that comparing the USPS to FedEx and UPS isn’t exactly apples to apples. But that’s due at least in part to the fact that the USPS has a government-granted monopoly on first (and third) class mail. When it comes to mailing a letter, there is no private option for Americans.

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Last week the Government Accountability Office reported on the state of Government Mail and the situation isn’t pretty:

USPS projects for fiscal year 2009:

-- a net loss of $7 billion, even if it achieves record savings of more than $6 billion;
-- an increase in outstanding debt to a total of $10.2 billion; and,
-- despite this borrowing, an unprecedented $1 billion cash shortfall.

USPS projects cash shortfalls because cost cutting and rate increases will not fully offset the impact of mail volume declines and other factors that increase costs—notably semiannual cost-of-living allowances (COLA) for employees covered by collective bargaining agreements. Compensation and benefits constitute close to 80 percent of USPS’s costs—a percentage that has remained similar over the years despite major advances in technology and the automation of postal operations. Also, USPS continues to pay a higher share of employee health benefit premiums than other federal agencies. Finally, USPS has high overhead (institutional) costs that are hard to change in the short term, such as the costs of providing universal service with 6-day delivery, a network of 37,000 post offices and retail facilities, and a delivery network of more than 149 million addresses.

It’s time to give Americans a private option for sending mail, with privatization of the USPS being the ultimate goal.

Read more on OpposingViews.com: U.S. Post Office Useless; Time For Government to Sell?