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Postal meltdown minor compared to federal budget

December 13, 2011
Salem News

"We have a business model that is failing," Postmaster General Patrick Donahoe admitted last week. But the question now is whether the Postal Service's new plan - charging customers more for less service - will work.

When the agency began closing post offices and downsizing processing centers, there were warnings that would result in delays in mail delivery. Nonsense, Postal Service officials insisted. Consolidating mail processing would be more efficient, they added.

But this week they admitted there will be delays as a result of consolidations. First-class mail formerly delivered the day after it was sent will take two, perhaps three days to reach its destination.

And, on Jan. 22, the price of first-class stamps will increase by a penny, to 45 cents.

And the Postal Service still is considering a proposal to discontinue mail delivery on Saturdays.

About 5,700 post offices, including several in our area, have been or are to be closed. About half the nearly 500 mail processing centers in the country are to be closed. Approximately 100,000 Postal Service jobs are being eliminated.

Yet the agency, which does not receive taxpayer subsidies, remains billions of dollars a year short of covering expenses.

Donahoe's comment may be the fiscal understatement of the year - at a time when that is a mark very hard for the federal government to hit.

That brings us to putting the Postal Service's meltdown in context.

The Postal Service, with a budget of about $75 billion a year, is about $9.2 billion short of covering expenses. Members of Congress are among those demanding the agency get its house in order.

Meanwhile, the federal budget of about $3.8 trillion is approximately $1.6 trillion short of covering expenses.

So, while the Postal Service's deficit amounts to about 12 percent of its spending, the government as a whole is running a 40 percent deficit.

A big difference, of course, is that the Postal Service cannot print money and cannot engage in the level of borrowing that keeps the U.S. Treasury afloat.

Still, the Postal Service clearly needs to find the better business model Donahoe understands is needed. Charging higher prices for less service probably will not be sustainable in the long run, however.

 
 

 

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