Post Office Creeps Closer to Default

by Robert VerBruggen

It’s been known for some time that if the United States Postal Service doesn’t find a way to cut costs, it will default on its debt to the federal government. The day of reckoning is approaching, reports the New York Times:

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.

Of course, Congress almost certainly won’t let the mail shut down during the holiday season, but legislators will have to find a long-term solution. Some options, as reported by the Times:

In recent weeks, [the postmaster general] 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 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.

Those are steps in the right direction — now that people communicate mainly electronically, USPS has less to do, and should downsize accordingly. A better solution? Eliminate USPS’s government-enforced monopoly on letter delivery, and let the free market sort out the problem.

And I would be remiss not to note, on Labor Day, that unions are responsible for many of USPS’s problems:

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.