It may be the perfect metaphor for America, 2011: The US Postal Service — one of the few government agencies actually authorized by the Constitution — is about to go bankrupt.
The USPS traces its roots back to 1692 but has seen its core business usurped by e-mail and nimble private parcel-delivery services — and, worse, is being crushed by exorbitant labor contracts and onerous government regulation.
Postmaster General Patrick Donahue warns he can’t make a congressionally-mandated $5.5 billion health-care-benefits payment for future retirees that’s due at the month’s end, and says the USPS faces total insolvency a year from now — perhaps even sooner. When the fiscal year ends on Sept. 30, the post office may have as little as a week’s worth of cash on hand — about $1 billion.
And that’s the good news.
Its annual deficit is now $9.2 billion, its revenues are plummeting and its labor costs — some 80 percent of its expenses — are far higher than those of competitors like FedEx and UPS. Benefits are generous and featherbedding — paying workers not to work — is rampant.
Under longstanding labor agreements, the USPS is forbidden from layoffs or worker reassignment due to low mail volume. Instead, it must have workers sit idle on “standby time” — which cost it nearly $31 million in 2009.
Low volume is a big part of the problem. The amount of mail the Post Office handles is down 22 percent in the past five years (with e-mail free and instantaneous, who couldn’t see that coming?) and the outlook for first-class mail is grim.
It’s not that the Postal Service isn’t trying to save itself. It’s pushing to end Saturday delivery, close 3,700 post offices and fire up to 120,000 workers (about a fifth of its workforce), even though layoffs are expressly prohibited under current labor contracts.
It’s also waging a doomed campaign to encourage more letter-writing, offering Disney- and Pixar-themed “forever” stamps featuring Buzz Lightyear from “Toy Story” and other cartoon characters.
But the USPS, semi-privatized in 1971, is squeezed by the worst of both worlds: With no taxpayer subsidies, it must self-finance via stamp sales and shipment charges — even as its employees partake liberally of government health-care, worker’s-compensation and retirement funds, into which the Post Office must pay.
The publicly financed gravy train was great while it lasted. But public-employee “retirement” was never intended to be a 20-year (or more) vacation at taypayers’ expense — a kind of golden-years “entitlement” for just doing your job.
The financial crisis has forced private-sector workers to come to grips with reality. These days, nothing is permanent, and the future does not come with a guarantee. If you want to “retire,” you’d better be prepared to pay for most of it yourself, or keep working until you drop.
The USPS is practically begging to be allowed to pull out of the government-goody factory that’s throttling it; the Obama administration proposes a 90-day extension on the $5.5 billion pension payment while Congress figures out what to do next. The Senate is considering various bills to allow ending Saturday delivery, post-office closures, etc. In the House, Rep. Darrell Issa also wants a financial-control board established, in case the USPS goes into default.
Titanic, meet deck chairs. Buzz Lightyear or no Buzz Lightyear, letter-writing is a dying art; bills and most documents are now easily conveyed by e-mail, and FedEx and UPS have better reputations for reliability.
No major government entity has ever simply vanished, especially not one with such a storied history. But the stupefying impracticality of its health-care and pension burdens practically guarantee the collapse of the venerable P.O., and its replacement by private industry — and similar burdens are a problem for every level of US government.
The feds may opt for vast subsidies to keep the Postal Service afloat — but they should heed the warning: The USPS is simply the canary in the coal mine, about to turn blue and keel over.