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Ridiculous pension requirement threatens future of post office

The U.S. Postal Service has given up its plan to drop Saturday mail delivery, at least for now. Although many Americans may breathe a sigh of relief over the decision, the fact is that the issues that led to the effort remain. The Postal Service is a financial basket case and Congress, which blocked the discontinuation of Saturday delivery, holds much of the blame.

The Postal Service’s trouble began – along with that of many other industries – with the arrival of the Internet. People could send emails, so they didn’t need to buy stamps. They could shop online, so retailers didn’t have to mail as many catalogs. They could go online to pay their mortgages, utility bills, credit cards and student loans, so they didn’t need the post office.

The digital age upended the business models of many industries, including that of mail delivery.

That presented a difficult enough problem, but Congress made it worse by ordering the Postal Service to prefund retiree health benefits for 75 years into the future. The cost is staggering: as much as $5.8 billion per year to pay the benefits of future postal workers who aren’t even born yet.

Both of those factors remain in play and while we weren’t anxious to see the Postal Service discontinue Saturday deliveries, it was a plausible idea from a business perspective.

For most businesses under financial distress, only two options are available: cut costs or increase revenues. Usually, businesses pursue some combination of those approaches, and while cost-cutting is typically painful, it is a standard response.

Eliminating Saturday deliveries – whatever the downsides – would have accomplished that.

So, fine. The Postal Service is bleeding money and, unlike any other industry punished by the Internet economy, it is prohibited from responding. What next?

First and foremost, Congress needs to lift the preposterous requirement to prefund retiree health benefits. It is causing damage and for no good reason.

Second, the post office should consider a significant increase in the cost of stamps. In Canada, mailing a first-class letter costs 63 cents, or 37 percent more than the U.S. cost of 46 cents. Maybe we need to start paying for the service we still use.

There should also be consideration of ending subsidies provided to some mailers, marketers in particular.

The ultimate solution, of course, would be to privatize the post office and open first-class mail delivery to competition.

That would be a huge step that would require preliminary study, so, for the moment, Congress needs to relieve the Postal Service of the prefunding requirement and ensure that the service has sufficient authority to respond to what is a mortal threat to its survival.