[Vision2020] Postal Service Is Nearing Default as Losses Mount

Carl Westberg idahovandal1 at live.com
Mon Sep 5 11:08:30 PDT 2011

But where would the Pony Express rider hitch the horse?

From: lockshop at pull.twcbc.com
To: thansen at moscow.com; deco at moscow.com
Date: Mon, 5 Sep 2011 11:03:30 -0700
CC: Vision2020 at moscow.com
Subject: Re: [Vision2020] Postal Service Is Nearing Default as Losses Mount

This would have to be one of the excedingly rare 
instances where Mr. Hanson could be correct. Selling the USPS to a private 
entity, as was the pony express, would almost certainly result in a better run 

  ----- Original Message ----- 
  Tom Hansen 
  To: Art Deco 
  Cc: <Vision2020 at moscow.com> 
  Sent: Monday, September 05, 2011 9:57 
  Subject: Re: [Vision2020] Postal Service 
  Is Nearing Default as Losses Mount

  The answer . . .

  Seeya round town, Moscow.

  Tom Hansen
  Moscow, Idaho


On Sep 5, 2011, at 9:44, "Art Deco" <deco at moscow.com> wrote:


    September 4, 2011
    Postal Service Is Nearing Default 
    as Losses Mount
    The United States Postal Service has long lived on the financial edge, 
    but it has never been as close to the precipice as it is today: the agency 
    is so low on cash that it will not be able to make a $5.5 billion payment 
    due this month and may have to shut down entirely this winter unless 
    Congress takes emergency action to stabilize its finances. 
    “Our situation is extremely serious,” the postmaster general, Patrick R. 
    Donahoe, said in an interview. “If Congress doesn’t act, we will default.” 
    In recent weeks, Mr. Donahoe has been pushing a series of painful 
    cost-cutting measures to erase the agency’s deficit, which will reach $9.2 
    billion this fiscal year. They 
    include eliminating Saturday mail delivery, closing up to 3,700 postal 
    locations and laying off 120,000 workers — nearly one-fifth of the agency’s 
    work force — despite a no-layoffs clause in the unions’ contracts. 
    The post office’s problems stem from one hard reality: it is being 
    squeezed on both revenue and costs. 
    As any computer user knows, the Internet revolution has led to people and 
    businesses sending far less conventional mail. 
    At the same time, decades of contractual promises made to unionized 
    workers, including no-layoff clauses, are increasing the post office’s 
    costs. Labor represents 80 percent of the agency’s expenses, compared with 
    53 percent at United Parcel Service and 32 percent at FedEx, its two biggest 
    private competitors. Postal workers also receive more generous health 
    benefits than most other federal employees. 
    The Senate Homeland Security and Governmental Affairs Committee will hold 
    a hearing on the agency’s predicament on Tuesday. So far, feuding 
    Democrats and Republicans in Congress, still smarting from the brawl over 
    the federal debt ceiling, have failed to agree on any solutions. It doesn’t 
    help that many of the options for saving the postal service are politically 
    “The situation is dire,” said Thomas R. Carper, the Delaware Democrat who 
    is chairman of the Senate subcommittee that oversees the postal service. “If 
    we do nothing, if we don’t react in a smart, appropriate way, the postal 
    service could literally close later this year. That’s not the kind of 
    development we need to inject into a weak, uneven economic recovery.” 
    Missing the $5.5 billion payment due on Sept. 30, intended to finance 
    retirees’ future health care, won’t cause immediate disaster. But sometime 
    early next year, the agency will run out of money to pay its employees and 
    gas up its trucks, officials warn, forcing it to stop delivering the roughly 
    three billion pieces of mail it handles weekly. 
    The causes of the crisis are well known and immensely difficult to 
    Mail volume has plummeted with the rise of e-mail, electronic bill-paying 
    and a Web that makes everything from fashion catalogs to news instantly 
    available. The system will handle an estimated 167 billion pieces of mail 
    this fiscal year, down 22 percent from five years ago. 
    It’s difficult to imagine that trend reversing, and pessimistic 
    projections suggest that volume could 
    plunge to 118 billion pieces by 2020. The law also prevents the post 
    office from raising postage fees faster than inflation. 
    Meanwhile, the agency has had a tough time cutting its costs to match the 
    revenue drop, with a history of labor contracts offering good health and 
    pension benefits, underused post offices, and laws that restrict its ability 
    to make basic business decisions, like reducing the frequency of deliveries. 
    Congress is considering numerous emergency proposals — most notably, 
    allowing the post office to recover billions of dollars that management says 
    it overpaid to its employees’ pension funds. That fix would help the agency 
    get through the short-term crisis, but would delay the day of reckoning on 
    bigger issues. 
    Postal service officials say one reason for their high costs is that they 
    are legally required to provide universal service, making deliveries to 150 
    million addresses nationwide each week. They add that a major factor for the 
    post office’s $20 billion in losses over the past four years is a 2006 law 
    requiring the postal service to pay an average of $5.5 billion annually for 
    10 years to finance retiree health costs for the next 75 years. 
    But the agency’s leaders acknowledge that they must find a way to 
    increase revenue, something that will prove far harder than simply slicing 
    In some countries, post offices double as banks or sell insurance or 
    cellphones. In the United States, the postal service is barred from entering 
    many areas. Still, the agency is considering ideas, like gaining the right 
    to deliver wine and beer, allowing commercial advertisements on postal 
    trucks and in post offices, doing more “last-mile” deliveries for FedEx and 
    U.P.S. and offering special hand-delivery services for correspondence and 
    transactions for which e-mail is not considered secure enough. 
    Mr. Donahoe’s hope is to cut $20 billion of the $75 billion in 
    annual costs by 2015. To do that, he wants to close many post offices 
    and slash the number of sorting facilities to 200 from 500 and trim the 
    agency’s work force by 220,000 people, from its current 653,000. (A decade 
    ago, the agency employed nearly 900,000.) 
    The postal service has the legal authority to close facilities, although 
    community opposition can make the process difficult. To placate critics and 
    cut costs, officials say they would seek to run some postal operations out 
    of stores like Wal-Mart or to share space with other government offices. 

    Cutting the work force is more difficult. The agency’s labor contracts 
    have long guaranteed no layoffs to the vast majority of its workers, and 
    management agreed to a new no layoff-clause in a major union contract last 
    But now, faced with what postal officials call “the equivalent of Chapter 
    11 bankruptcy,” the agency is asking Congress to enact legislation that 
    would overturn the job protections and let it lay off 120,000 workers in 
    addition to trimming 100,000 jobs through attrition. 
    The postal service is also asking Congress for permission to end Saturday 
    Given the vast range of stakeholders, getting consensus on a rescue plan 
    will be difficult. 
    Senator Susan Collins of Maine, like many lawmakers from rural states, 
    vigorously opposes ending Saturday delivery, which would trim only 2 percent 
    from the agency’s budget. Ms. Collins, the ranking Republican on the 
    committee overseeing the postal service, said the cutback would be tough on 
    people in small towns who receive prescriptions and newspapers by mail. 
    “The postmaster general has focused on several approaches that I believe 
    will be counterproductive,” she said. “They risk producing a death spiral 
    where the postal service reduces service and drives away more customers.” 
    The post office’s powerful unions are angry and alarmed about the planned 
    layoffs. “We’re going to fight this and we’re going to fight it hard,” said 
    Cliff Guffey, president of the American Postal Workers Union, which 
    represents 207,000 mail sorters and post office clerks. “It’s illegal for 
    them to abrogate our contract.” 
    Senators Carper and Collins do back several of the postal service’s main 
    ideas to avoid default, including recovering around $60 billion that some 
    actuaries say the agency has overpaid into two pension funds. Although the 
    Obama administration is working closely with the senators to find a 
    solution, it has signaled discomfort with the pension proposals, questioning 
    whether the postal service really overpaid. 
    Meanwhile, Representative Darrell Issa, the California Republican who is 
    chairman of the House Oversight Committee, says the pension proposals would 
    amount to an unjustifiable bailout that would not solve the agency’s 
    underlying problems. He is pushing a bill that would create an emergency 
    oversight board that could order huge cost-cutting and void the postal 
    service’s contracts — a proposal that not just the unions, but Senators 
    Carper and Collins oppose. 
    Fredric V. Rolando, president of the National Association of Letter 
    Carriers, warned of disaster if partisanship keeps Congress from acting. 

    “This is about one of America’s oldest institutions,” he said. “It 
    survived the telegraph, it survived the telephone, and we have to do 
    everything we can to preserve it and adapt.” 
    Wayne A. Fox
wayne.a.fox at gmail.com

    services made available by First Step Internet,
serving the 
    communities of the Palouse since 
         mailto:Vision2020 at moscow.com

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