In early February, the US Postal Service announced plans to halt Saturday mail delivery. The plan still needs congressional approval before it can be implemented, but it is significant that the Postmaster General chose to make the announcement before that approval was secured. The USPS has floated this balloon before, but has always been shot down by Congress.
I suspect that every one of you knows the feeling of being stuck between a rock and a hard place. That damned if you do and damned if you don’t scenario is familiar to most business owners. So I hope you feel some sympathy for the USPS as it strives to find its way out of a morass not of its own making.
The USPS has the unhappy distinction of being the only government agency that is expected to operate as a private corporation, but without the freedom to set its own course. While it receives no revenue from tax dollars, it is still under the control of Congress.
This was not always the case. In fact, the USPS was a typical tax-supported agency of the federal government until 1970. That year, Congress adopted the Postal Reorganization Act of 1970, which dictated that the USPS would no longer receive tax revenue, but would have to become self-supporting. Further, it was required to be “revenue neutral”, meaning that it was not supposed to make a profit, but only break even.
There have been many bumps along the road, but the biggest came in 2006 when Congress mandated that the USPS had to set aside retirement pension funds for future employees for the next 75 years. It had 10 years to comply—at a cost of about $5.5 billion per year. No other agency, and certainly no private corporation, has ever been required by law to do this. It didn’t help that the country was on the verge of a massive recession.
Many people argue that Congress set up the USPS to fail when it passed that law in 2006. In fact, there aren’t many people who will argue against it because it’s pretty clear that was the intent. It was no secret that the governing body at the time wanted very much to see the USPS privatized. Many still hold that view today.
However, by trying to regulate the agency into a corner, our leaders hobbled its ability to remain competitive as information delivery systems underwent rapid and drastic changes. As any business owner knows, once you fall behind, it’s nearly impossible to catch up, much less regain a lead in the marketplace. Also, you can’t cut your way to prosperity. Whatever the USPS does next, I fear it may be too little, too late. I hope I’m wrong.