The U.S. Postal Service is in trouble, according to Postmaster General Patrick Donahoe. It’s something most of us already knew. But his solution – a request to raise the cost of a stamp by 3 cents – amounts to little more than nibbling around the edges of the problem.
Donahoe characterized the agency as in “the midst of a financial disaster” and may need an emergency increase in postage rates to keep operating. The post office expects to lose $6 billion this year. While that pales in comparison to the staggering $16 billion lost last year, the substantial deficits remain unsustainable.
Postal officials are finding it near impossible to stop the bleeding. The question is whether a few pennies will make much of a difference, although it’s not hard to understand why the agency is reaching for pennies.
The Postal Service hasn’t exactly helped itself with some of its business decisions, including the “forever” stamps. Sure, it’s great for consumers who are able to lock in current rates, and it may provide a quick shot of revenue as consumers stock up to avoid price hikes, but it reduces the immediate impact of raising the price of stamps by a few cents as mailers burn off their stock of cheaper stamps.
The agency also has tried ill-thought-out cost-cutting measures, such as trying to close the productive William Street processing center in Buffalo and transfer that work to Rochester. Besides reducing efficiency, that move would also have increased delivery times in Buffalo, just the opposite of what the post office should be doing if it wants to stay in business.
Now there’s talk of ending mail delivery on Saturday.
Few could have foreseen how drastically the Internet would affect mail service. Rather than reach for stamps, consumers now turn to the Internet to communicate, pay bills and otherwise conduct business.
But the answer can’t be to continually raise prices and reduce services. That simply puts the post office on a death spiral.
The Postal Service needs to restructure in order to operate more efficiently, and it will need the help of Congress to do that. The Postal Service is no longer funded by tax dollars, but Congress retains too much control over its activities.
The big thing Congress can do to keep the post office in business is to drop its crazy insistence that the post office prefund retiree health benefits for the next 75 years. No other agency faces that kind of burden. Imagine being forced to fund retirement benefits for workers who haven’t even been born. Ending that senseless requirement would save the post office about $5.5 billion a year and get it near the break-even point.
The proposed rate hike must be approved by the Postal Regulatory Commission. But any increase should be considered a short-term patch that will keep the agency operating while Congress works on the long-term solution.