[Vision2020] Postal Service Is Nearing Default as Losses Mount

Paul Rumelhart godshatter at yahoo.com
Mon Sep 5 13:00:08 PDT 2011

If I remember right, the USPS has a monopoly on regular postal mail (not over-nighted, non-packages), so FedEx and UPS cannot, by law, compete in this area.  Aren't government-granted monopolies great?

If they agree to another labor contract that doesn't allow for layoffs, then they will have slit their own throat (again) and deserve to bleed out.  I think unions can be a force of good, saving their members from the abuse of capitalism run amok, but they can also be incredibly stupid sometimes and help to bring down the whole company instead of allowing their members to be inconvenienced in any way.  


From: Tom Hansen <thansen at moscow.com>
To: the lockshop <lockshop at pull.twcbc.com>
Cc: "<Vision2020 at moscow.com>" <Vision2020 at moscow.com>
Sent: Monday, September 5, 2011 11:44 AM
Subject: Re: [Vision2020] Postal Service Is Nearing Default as Losses Mount

And considerably more expensive!

Worst case scenario, there is always FEDEX, UPS, etc.

Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho
"When all is said and done, have you done or said enough?  Have you just gone along for the ride, or have you steered destiny's hotrod?  When you leave this world, did you make it any better than it was when you arrived?  All you need is all you've got: your wits and the clothes on your back.  Your epitaph is yours to earn.  Your legacy is yours to make."

- Author Unknown


On Sep 5, 2011, at 11:03, "the lockshop" <lockshop at pull.twcbc.com> wrote:

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 ----- 
>>From: Tom Hansen 
>>To: Art Deco 
>>Cc: <Vision2020 at moscow.com> 
>>Sent: Monday, September 05, 2011 9:57  AM
>>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  unpalatable. 
>>>“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  overcome. 
>>>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  costs. 
>>>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  May. 
>>>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  delivery. 
>>>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
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