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Dead Letter Office: Post Office Wants an $11 Billion “Not a Bailout”

Written by Gary North on June 13, 2012

The head of the U.S. Postal Service has put it graphically: if the USPS does not receive $11 billion from Congress before summer is over, the USPS is Greece.

That comment got a laugh from some his listeners. I am not laughing.

The deficit of the USPS will nor be reversed. The system is mismanaged, filled with Civil Service-protected workers, and unable to pay its pension obligations. It keeps raising postal rates. This causes more people to use email. More people abandon USPS. The deficit gets worse.

Yet he had a point. The USPS is a lot like Greece. It refuses to reform itself. It is running a deficit. Its workers are overpaid. It cannot pay its pensions. It is dependent on outside aid. And it will not change its ways. It only pretends to.

But it is not like Greece in this way: Europe needs Greece. Greece is basic to Europe’s economy. We don’t need the USPS. We can use email, UPS, FedEx.

He made this comparison. Greece’s ratio of debt compared to gross domestic product is 1.61, while the USPS’s ratio of debt compared to revenue is 1.51.

He later said the comparison of Greece and the USPS is different in this way: Greece is close to a default and needs a bailout. That’s not true of the USPS, he said.

Yes, it is.

He added: “Unfortunately, if we don’t do something we will look like that.” He does not mean “we.” He means Congress. He means taxpayers. He means us. He does not mean employees of the USPS.

He says that the USPS has a cost-cutting plan.

Greece’s government has “austerity.”

Neither goes far enough.

The USPS has a deadline: Aug. 1 It needs $5.5 billion. It will need another $5.6 billion by September 30.

It was going to close over 200 tiny rural Post Offices. Now it’s down to 48. Congress may cut this to zero.

It lost $5.1 billion in 2011.

The USPS must make regular payments to prefund retirement benefits. It’s not like Medicare, which writes IOUs to the Treasury every year and spends the money.

He offered a plan to cut Saturday delivery. “We’ve just lost way too much in first class mail to maintain six-day delivery — it makes no sense,” said Donahoe.

Run a deficit? Cut service! That’s the government way!

The plight of the USPS is like a small-scale U.S. government. It cannot gets its house in order. It cannot run a surplus. It is going to go bust at some point.

But there is this difference: no one is really dependent on the USPS any more. Over half the population is dependent on checks from the U.S. government.

Continue Reading on money.cnn.com

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14 thoughts on “Dead Letter Office: Post Office Wants an $11 Billion “Not a Bailout”

  1. The business model in the age of e-mail, electronic transfers, and fax will not work. End Saturday delivery and close unprofitable post offices now. Then work on a model that can work.

  2. What I view as the biggest issue is the demand to run the USPS like a business. When a 'business like' decision is made Congress goes out of their way to nullify it.

  3. 1776Patriot says:

    Stop saturday delivery. Close a post office if within 5 miles of another post offfice this is the inner city ones. Cut payroll and retirement by 2%. Better to take a cut and recieve than to close it all. See me in 1 year with results. Why won't anyone use common sense instead of all the posturing.

  4. If it walks like a bailout, talks like a bailout, looks like a bailout..

  5. Agreed; We do not need the USPS, so please privatize. However, I do not understand what Mr. North means by
    'Greece is basic to Europe's economy' ? Please explain (to this former European who also knows Greece).

  6. GOLLY! Just think of all the votes Obama won't get from the USPS employees if they lose their jobs!!!

  7. have you been in a post office lately these sorry ass people think you owe them a living you know how much a clerk makes
    try $65000.00 plus a year and that don't count over time.I know because a friend of mind works for the post office he told me that they are the most wasted government employer and waste more money and time and resources that it would be best for the tax payers to put them out of business it would save everyone a great deal of money.

  8. proud american says:

    Sorry, I disagree with all of you. My husband is a Mail Handler and WORKS for his pay check. No where in the world can you mail a letter for less than 50 cents and it arrives in a day or two. The USPS has problems because it was required by the Federal government to pre-fund it's pension plan for the next 75 years. Ask your employer to do the same for their employees and I guarantee they will file bankruptcy. The 5.1 billion deficit isn't an actual deficit. It is what the post office didn't make in their budget projections. Wake up! When are you going to stop hating others for having a public sector job, one you could have applied for by the way. Your jealousy is what is destroying this country. Don't blame the workers,blame the unions and management for negotiating salaries which aren't tied to performance. Blame the unions for protecting employees who are lazy & incompetent instead of fighting for those who are valuable employees. Why not rally around your neighbors and help fight for jobs, or do all of you know of a surplus of employment that the rest of us don't? Shame on all of you for your petty jealousy and the destructiveness you cause.

  9. AD Roberts says:

    Sorry for you. But I have been there. The unions fight harder for the drug users and slackers. Then they let good people and workers take a beating.

    It is really simple. TOO MUCH ——BENEFITS, SALARY, OVERTIME and to many slackers. Not all. But the post office is losing it's NEED TO; EXIST. Let it die. Otherwise you will be like PATCO and the airtraffic controllers. If the pressure to stop the deficit spending gets great enough, the cuts are going to come. And the longer it takes for these cuts to happen, the harsher it is going to be on EVERYONE.

    Time for you to start planning for a future without the government filling your pocket.

  10. jerry1944 says:

    A lot of public workers start off at low wages for like 5 yrs i think it is before they start getting raises that compare with some private. But they do have better benifis as incentive. As time progresses there pay starts to match are surpass the private sector and they still have the great benifits. Just think if you go to work with them at 20 yr old and work till you and old age of 50 you start getting your retirement. If you live to be 70 that a long time to suck off that little retiremnet you put in So yes i can see where it needs reforming but i the unions want go for that. After all the goverment has ALL the money so they think. And it looks like they mite be right when we elect ppl like obambo and romney. So we the ppl pay for our stupidity

  11. Sumerian Man says:

    Ya know, the Post Office, Health and Human Services, Dept. of Education, to name only a few, were doing just fine until unqualified and under achieving minorities were pushed into supervisory and upper management positions by our liberal democratic friends. The Post Office being the biggest example of minority boondoggeling. For over 200 years being the only agency to show self-sustanance until recent years, now is nothing more than a giant black hole for making money and mail disappear! EEO at it's best!

  12. For 8 years now, I've been working for fed express. I started out loading and unloading trucks. Now, i'm a driver. My brother is a mail carrier for usps. Anyway, another ignorent comment. Where do you get your facts from? Clerks make far less than $65,000/ year. A top rate/ senior clerk makes around fifty/year. Your a fool and sound like one. YOur arguments have tons of blanket statements and no argument. How is the destruction of usps best for taxpayers? Taxpayers don't pay for the service? Give me one reason how you will save a great deal of money from usps closing? Ups and fedex cost more for the same service. Also, if you don't believe me. Look it up. All postal hourly employee pay is public knowledge.

  13. Is it just me or every person that dislikes usps can't come up with an argument greater than at a 2nd grade level? Compared to ups and fedex, isn't usps cheaper for the same service? Is 44 cents to send a letter around the country expensive? Clerks have more responsibilites than cashier duties.

  14. My personal Post Office story … One day, several years ago, I was in my local post office on a Tuesday morning. The place was packed with customers trying to get stuff mailed on their way to work. One line was open and there were roughly 15 people waiting. In plain view, not 10 feet from the one working employee stood 3 more yacking about last night's NFL football game. The place had 4 windows and all 4 should have been in operation. But, they weren't. I sent a letter to the post office, relating the story. Do you know what they did? … They built a plywood partition, so no one could see their employees NOT working. OMG …

    Years ago, the post office shed 4th class mail and parcels. That gave opportunities to companies like UPS and Fed Ex. They made big profits, where the post office had experienced big losses. The difference? UPS and Fed Ex guys WORK! Get the government out of the mail delivery business. They've never been cost effective … and they never will be.