After boasting of profits for several years, the U.S. Postal Service this year is facing losses of between $2 billion and $3 billion despite a January rate increase. To combat its financial woes, the agency is now considering yet another, heftier rate increase this summer and is squeezing Congress to get its way.
To hear postal officials tell it, the agency is unfairly shackled, prevented from competing in the market and besieged with competitors from the private sector who are taking advantage of its suffocating constraints.
In a recent speech, Postal Service adviser Larry Speakes blamed congressional over-regulation for leaving the Postal Service incapable of dealing with increased competition.
This is fiction. The Postal Service's inspector general has identified more than $1.4 billion in waste, fraud and abuse at the agency. Recent reports of extravagant parties for outgoing postal executives, abuse of chauffeur-driven limos and the embarrassing story of high-level postal officials getting exorbitant relocation stipends to move closer to work have become common. Recently the agency decided to distribute $280 million in bonuses.
Further, while mail volume has been stagnating, the agency's work force has ballooned. Today, it employs more than 36 percent more people than in 1980, 900,000 people, making it the largest non-military employer in the nation. A private company experiencing a downturn in business would not react by jacking up its labor costs. In fact, it would do exactly what we seen happen in the private sector, downsizing and vigorous campaigns to boost productivity. In 2001, the General Accounting Office predicts, the postal service will increase productivity by an anemic 0.7 percent, in spite of pouring billions annually into automation and information technology upgrades.
This is no way to run a business, but then the Postal Service's track record is abysmal when it comes to behaving like a business. It lost more than $84 million in the mid-1990s on non-mail related commercial flops. These losses haven't deterred officials from proposing new business boondoggles, such as its newest offer to distribute national identification cards.
In fact, the Postal Service is not a business. It is a quasi-governmental agency with subsidies worth well over $1 billion annually. It has government-sanctioned monopoly control over all mail delivery. It is tax-exempt and pays no state or local licensing fees on its vehicles. Its charter doesn't even require it to be profitable. It has the power to regulate, and therefore stifle, other businesses with which it directly competes. It even has the legal authority to mandate its competitors in the express-letter delivery business charge at least twice what the postal service Post Office charges.
Facing its current losses and backed by a massive advertising budget, postal executives hope to portray the agency as a victim and convince lawmakers and consumers that the panacea lies in freeing it to "compete" in the private sector.
This is nonsense. Postal management has always had the power to make businesslike decisions to stem the red ink. Instead it has punted. Right now, the Postal Service could institute a hiring freeze. With its 5 percent attrition rate, it could shed 45,000 employees a year. Postal management could quit posing as a dot.com, liquidate its dead-end business ventures, and refocus on its core mission, delivering the mail. It could then save hundreds of millions on unneeded advertising and image promotion. Postal executives could implement cost-saving measures they have already identified to save additional millions.
What executives really mean when they speak of reform is to be free to raise rates faster and to obtain unfettered authority to maraud into new areas of commerce, especially e-commerce, looking for more revenue.
The bottom line is the Postal Service is oversized, bureaucratic and marbled through and through with waste and mismanagement. More rate increases will do nothing to change that reality. In fact, another rate increase will discourage the reform the Postal Service desperately needs and which its top officials have failed to institute.
Fundamental privatization is the only long-term solution to Postal Service's problems. But for now, taxpayers, postal ratepayers and Congress should deny another rate hike and insist postal executives start earning their hefty salaries. This crisis is largely of their own making, and business-style reforms — not higher prices — are the solution.
Leslie K. Paige is a vice president at Citizens Against Government Waste, a taxpayer advocacy group dedicated to eliminating waste, fraud and abuse in government.