Wednesday, October 21, 2009

US Postal Service facing "acute financial crisis" says Postmaster. Do we really want the government now taking over our health care system?

The Postmaster General says the Post Office is facing an "acute financial crisis".

The following is from a posting on the National Press Club's website.

The 234-year-old U.S. Postal Service is in acute financial crisis, John Potter, the 72nd Postmaster General said Thursday [October 8th] during a National Press Club luncheon.

After losing a projected $7 billion in the fiscal year ending Sept. 30, Potter said he is working to help the USPS reinvent itself. It won’t be an easy task, as 28 billion fewer pieces of mail were sent last year compared to fiscal year 2008, he said. Potter said that holiday mail, one of the traditionally highest volume periods of the year, was flat last year — and he expects it to be flat this December, as well.

In addition to more people using email rather than snail mail, and the lagging economy that is causing fewer people to mail printed ads pieces and other promotional materials, Potter believes the USPS’ deficit also grew out of a three-year-old law that added more than $5 billion to annual costs for prefunding retiree health benefits.

“I was nervous about it because I knew we just couldn’t afford to pay that bill when it came due last week,” Potter told the gathered crowd. “Our mailers were nervous, too. They were concerned we’d have to pull back on service to make ends meet — and that would have negatively affected their businesses.”

To stave off the deficit, Potter cut $6 billion in expenses and reduced the USPS career workforce by 40,000 positions. But the man who led the USPS for eight years, and championed the development of a strong privacy program, said that unless the USPS makes significant changes he forecasts losses of $5 billion per year for the foreseeable future.

Options he’s considering include reducing the current six-day per week deliver service of the mail to five days per week, which would cut $3 billion per year from the budget; and adding additional products and services for sale at the organization’s thousands of retail outlets as do postal services in other countries. In Japan, he noted, postal customers can purchase life insurance. In France, postal stations sell mobile phones.

“I am not wedded to any one approach, but we need to generate new revenue,” the postmaster insisted, noting that solutions may not come easily because of the way the USPS is organized. It is overseen by Congress, but is charged with running like a business. He did admit that politics is an issue he contends with, but said he’d prefer to keep his eye on the real issue of finding ways to balance his budget.

Certainly the Post Office like every other business is facing tough economic times which, coupled with the rise of the Internet and email, makes it's primary activity - delivery of mail - increasingly less attractive to the general public. I increasingly have second thoughts every time I put a 40 plus cent stamp on a letter.

The question is: should the government be in the postal business? Or can it effectively be in the postal business? The problem with government is it's not accountable to the market hence consumers. Therefore it's it's often incredibly inefficient in how it does things. And because it's owned by the government it simply doesn't go out business, it just runs up deficits which are covered by the taxpayers.

I think the experience with a government run postal office is instructive when considering plans to expand the government's reach and control of health care in our nation.

If the government can't effectively run the postal service, there's no question in my mind the government has no business taking on something as complex as the health care industry. Unfortunately, the stakes are much higher with health care; people's very lives are at stake versus delivering some letters and mail to our homes on time.

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