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.