Here we go again. The US Congress is complaining that the US Postal Service (USPS) is losing money. And, they can’t figure out why. Instead of fixing the problems, they plan to cut Saturday delivery (why not Wednesday?) and adjust another problem they caused the Service with its pensions. (I’ll address that below, too.) And, you wonder why I doubt the intelligence of our Congressfolk and Senators?
So, let’s consider a few facts.
- The Internal Revenue Service has all but outlawed the submission of paper tax returns. Yes, that’s right- it’s illegal for most tax preparers to let their clients mail in their tax returns, since 1 January 2011. And, not including businesses, more than 100 million tax returns were filed electronically in 2011- about ¾ of the total. I will be a sport and assume that the postage for these mailings would only be 45 cents (but, I’m sure the average is a lot closer to 65 cents). That means that the US Postal Service was shortchanged by some $ 45 million- just for the filing. Now let’s add in the fact that the IRS prefers to electronically submit your refund- and according to the IRS, that number came to about 70 million folks. For another $31.5 million. And, we can’t forget that the IRS no longer mails out instruction booklets and forms, unless you request them. One could assume that covers everyone- but some folks do request them, so there is some mailing. But, with corporate AND individual tax booklets not being mailed- even at a reduced rate- we are talking about 150 million pieces- at no less than 40 cents apiece. For another sum of $ 60 million. So, at a bare minimum the IRS has cost the US Postal Service at least $ 135 million in annual revenue. And, these numbers don’t include corporate returns- which generally use $ 1 or more in postage. Admittedly, this is only 2.6% of its total deficit…
- Consider the fact that at least 90% of the individual tax returns would require state filings, as well. (Not only do some states have no income tax, several states refuse to accept electronic submissions for corporate returns- Virginia, among them). And, most states don’t mail out information booklets and forms, also. That means state electronic filings and refunds rob the Postal Service of another $ 120 million or so (2.4% of the shortfall).
- Now, let’s consider the Social Security Administration. They used to mail monthly checks to all their recipients. No more. Now, it’s electronically deposited (in a bank account or a pre-paid credit card). That’s 54 million recipients. 12 times a year. Or, at the current postage rates of 45 cents, that number comes to $ 292 million- but this volume would offer them a discount, so that number is a little too high. But, if not discounted, that would be almost 6% of the total deficit.
- This is not going to include numbers- but remember, the above two issues only involve 2 of the myriad US agencies that have radically reduced the use of US Mail. to save money- but no one considers that almost all of this is just one pot. Of course, why would we know the shin bone is connected to the knee bone….
- I don’t have an exact number for this set of calculation (just estimates), but when Ronald Reagan was President, the US government decided that the Postal Service monopoly on mail was wrong. And, let the United Parcel Service and FedEx handle next day and second day correspondence and reports. (They always had the right to handle freight and packages.) Yes, the US Postal Service still had Next Day Air, but it’s nothing compared to the volume of the two private carriers (and a few smaller ones). [You should know that the US Postal Service is the ONLY carrier to deliver on Christmas Day and 4th of July (the latter was a surprise when my son received a birthday present ON his birthday).] As I said, I don’t have a volume number for that, but good estimates from various 10-K filings indicate that FedEx delivers about 650K overnight letters and UPS delivers about 425K. If those were handled by the US Postal Service, at the lowest price of $ 14, there would be another $ 15 million in revenue- at least.
- The government acknowledges that, of the 2011 US Postal Service deficit, only 23% comes from operations- which includes the drop in mail volume. The other 77% comes from various Congressional mandates imposed upon the USPS. (Which means, by the way, that the three numbers above really constitute 36% of the US Postal Service shortage- and that does not include the Next Day air component.)
Now, we get to the next real issue being decided by Congress. Not only are our elected officials going to solve this problem (remember- they cause 73% of the US Postal Service deficit by their fiats), but they plan to fix at least one other problem. One that doesn’t need fixing. But, a certain political party wants these changes.
You see, the proposal (Senate Bill 1759) is to alter the Federal Employees Health Benefits Program (FEHBP). A change that will reduce worker’s compensation to all government employees. By requiring these Postal Service changes, other employees included in this program will have reduced benefits. And, the premiums, with the Postal Service no longer required to contribute, will increase (since the overhead will now be spread over a smaller pool of members).
This does not even begin to address the need to find new doctors as the USPS switches its insurance program. Postal workers, who tend to be older than other government agency employees, will be forced to employ physicians and health professionals that are included in the new plan. Which means, they lose continuity- and some may even have setbacks as the new doctors try to come up to speed with the various ailments and treatments for their new patients.
Oh, and Senator Tom Coburn (R-OK) managed to sneak in yet another provision. Totally unrelated to anything Postal (but if I were a techie working for the government- it could drive ME “postal”.) One that would limit all agency spending (not just the USPS) on conferences to 80% of that spent in 2010. That includes technical meetings (whose costs don’t go down, and are vital to learning new technologies and sharing information so that everyone benefits). Now, there’s a well thought out idea!
The world is changing and we just don’t need the U.S. Postal Service of the past. I think the quality of the service that is provided has decreased dramatically over the past few years. The mail delivery is slower and the prices continue to go up…in my humble opinion.
I am fine with cutting the Saturday deliveries….if it means keeping the fees for service at a reasonable rate.
Janette Fuller recently posted..Poem – Mixed Media Greeting Card
Janette-
I am not sure that mails are delivered slower than before. I know we feel that way, since we expect everything to happen instantaneously.
When I was a boy, I loved visiting the Manhattan and Brooklyn post offices. Which had tunnels between them to transport the mail. When that modality stopped, it did slow the mail. And, sending the mail from Brooklyn to some northern “mail center” only to return to Manhattan or Brooklyn strains credulity as a “savings”. Those were done in the past- the last decade or so has seen a more rational approach to mail handling.
(Note: Even FedEx figured out sending every package to Memphis to return next door was insane. That’s why they bought a ground delivery company AND they sort packages that are destined for the same region out of their main processing facilities, to save money, too.)
Roy
Holy crap! It looks like they are trying to make the post office a thing of the past. It amazes me the changes in the post office in the last 30ish years. I remember our postman always in uniform from hat to shoes. Now, we have temp workers a lot wearing whatever, and even the regular employees don’t have the intricate uniforms they used to. The fact that they hire temp agency employees also just fractures me. I know postal workers have good benefits and wages, and like a lot of the corp world now the post office is cutting costs by using temp people who they only have to pay a fraction of the wage and no benefits. If I think about it, it is really overwhelming to me how this world is changing, and how “good jobs” in our country are being cut into pieces . Great post as always, I hope you don’t get tired of me saying that! Thank you as always!
Please don’t inveigle me in a political discussion about whether these employees vote for a certain political party or not.
I feel for these employees. They are another disappearing component of the middle class, one that afforded a large component of our population a chance at upward mobility.
But, regarding the post offices themselves, I have less of a problem. Why? Let’s start with the fact that some of them in large population centers are not paying for themselves. (But, the scary part is that NO ONE in the USPS has evaluated these potential closings (by their own admission) to determine what the revenue and expenses are for these individual stations.) And, in many rural communities, the post office function could return to where it used to be- a shared location in a local grocery/general store, like when we were younger. I know when I lived in South Central Virginia, at least three postal centers could have closed and had their entire functions covered by a local store at about 1/2 the costs or less.
There are modernization issues. We can close offices. But, if the US government wants a postal system – and I know the citizenry does- then every time they “save” money by outlawing an agency use of the postal service, it must recognize that a subsidy for some of that savings is due to be paid to the USPS.
Roy
Ok here’s a thought. Feds and States cutting back on mailing tax forms, instruction books and the likes has cut back on potential USPS revenue, but look at the trees saved! I think politicians try to appease too many opposing points of view.
Carolina HeartStrings recently posted..LASAGNA
Oh, I am NOT complaining about this, Alessa.
What I am saying is that one must look at the overall costs. If we elect to not mail out tax information and to outlaw tax filing by mail- fine. But, we MUST recognize that the revenue involved with those activities is needed by the Postal Service. And, that means at least part of it should return to this quasi-governmental agency in terms of a subsidy. The savings of trees AND printing are additional bonuses to the government.
But, to sit there in front of the TV klieglights and blame the postal service for their revenue drop is disingenuous, at best.
Roy
Hello,
This is a very interesting and frightening article. I have followed you for a while and enjoy your perspectives.
It has been my experience (without any in depth political experience) that government has for many decades acted to break the back of it’s own infrastructure. The adage “If it ain’t broke, don’t fix it” seems to me to have become, “If it ain’t broke, let’s figure out how.” Simplistic observation I imagine, and you are so much more adept and informed, but it frightens me how temporary and disposable we seem to have made basic services that had worked effectively at one time. I think (in my uninformed way) that if postal delivery [USPS] goes away, the cost will be far greater and limit communications. They may call it technology, or streamlining, but in fact to me it would be turning their [government’s] back on their own failures and poor planning and calling it “less government” or “progress” while wiping egg off their own faces. You said all of it far more eloquently than I can.
Thank you and very good post.
Be well.
Ron:
It is a pleasure to hear from you.
I, too, worry about this insane concept that started to take hold some 30 years ago. We privatize government elements to save money- which costs us more. without bringing too much MORE politics into the discussion, we now have privatized the bulk of our “wars” in Afghanistan, Iraq, and Yemen (oh, you didn’t realize we had one going on there, too?)…. And, just for a point in fact, I find it annoying that we “pay” a soldier who drives a truck about $ 25K, but pay a mercenary (oh, wait, contractor) about $ 100K for the same job…
Roy
I was wondering if anyone was going to say anything about trees. Thanks, Alessa. Roy, where do you think this money from the IRS should be taken from to subsidize the less used mail service? And why should the IRS or congress subsidize the mail service anyway. Just because IRS and the congress have become tech savvy, doesn’t mean they owe the Postal Service anything. The auto companies didn’t subsidize horses. OK that was private companies all around, but I was looking for a simple analogy. By the way, this is not a political comment. I don’t do those. It’s an economics one. And no, I’m not much smarter there either.
Ann recently posted..How to Play and Win at the Game of Marketing Ball
I think you have totally confused the job of government, Ann. The US – both as a political entity- and its citizens- need postal services. They are essential government services. As such, all the money involved comes from and goes to one pot. How one elects to split it up – be it a subsidy (it is only called this because we made the Postal Service a quasi-governmental agency (in 1970) or general funding, as is true for governmental agencies- is simply a fiction.
If the Postal Service were to shut down, then the IRS would have to spend about twice its current budget, since the “postal audits” it performs at minimal cost would have to be done the old fashioned way- in person, at high costs. Or, it would have to afford folks a better opportunity to cheat.
And, you are wrong- it’s an absolute political comment!
Roy
Times are changing, and we need to accept that the USPS should take a lesser role if it wants to remain functioning.
In my opinion, it is not only the private delivery services that changed the story for USPS, but the advent of more convenient and cheaper communication technology.
Justin recently posted..jamorama guitar software review
Justin…
I am not saying to hold back the dike. I am saying that when the US government elects to save money for one agency, they must understand the repercussions on another. Or, when the US, state, and local governments elect to not repair roads and bridges, they are forcing their citizens to spend MORE money to fix their shocks, struts, and tires.
I think the USPS, the US Government, and its citizens need to consider what communication processes should exist in 2075- and whether the development of SECURE document and message delivery between citizens, between corporations, between government and both, and between citizens and corporations are a priority, how the instantaneous (or a slower delivery option, at a lesser cost?) process should be provided and at what cost, etc.
Roy