Should the USPS Be Privatized?

[CarolKing]

I thought that this needed its own thread. Folks are posting info in the presidential thread. After the election is long gone we can continue to talk about the mismanagement of the Post Office. It loses money year after year. Our tax dollars are blowing in the wind to fund this albatross. Who sends letters anymore? I get too much junk mail that I don't even want.

We had some real bad service about a couple of years ago. It started after our old Maillady retired and the bad service lasted over a year. Several folks in our neighborhood complained. We weren't getting our mail until 8 or 9:00 at night on some days. I even wrote to Senator Murray about it. Now the service has been much better. We usually get our mail by 2:00. As long as I get it before 4:30 I don't care.

 

[DDave]

Some Benefits I reap under the current postal regime....

Regarding USPS, I get flat rate shipping at a great rate. Tracking as well and free shipping supplies.
It is a Federal Offense for anyone to mess with a package I send to you.
The post office staff, at least in my locations, are hands-down the best, most helpful people on the planet.
When I call the main post office number, I get people who can actually help.

UPS: Would cost my buyers more to ship same items. They are the ones who deliver 8pm - 10pm.
Fedex: More costly, though they deliver during acceptable hours.
DHL: That is a whole nother story. Tracking is poor. Costly. Most packages I send/receive are damaged in transit.

(For me, IMHO, this is one system that could be left as is.

 

[Silver420Surfer]

FUCK NO!!!!!!

Long live the USPS

Sorry if you had bad service awhile back, but keep yer damn privatized mitts of the USPS.

 

[Fat Freddy]

Just FYI as this topic of discussion proceeds, is that
the Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

 

[NickDlow]

Just FYI as this topic of discussion proceeds, is that
the Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

That's what I thought too...

 

[CarolKing]

The post office lost $2 billion in 3 months

By Tomi Kilgore
Published: May 10, 2016 1:55 p.m. ET

Controllable earnings from operations jumped 84% to $576 million

Postmaster General Megan Brennan isn't happy
The U.S. Postal Service reported a fiscal second-quarter loss of $2 billion, primarily due to costs it said were out of its control.

When considering only its business operations, the post office said “controllable” earnings for the three months ending March 31 jumped 84% to $576 million from $313 million in the same period a year ago.

Revenue grew 4.7% to $17.7 billion, as 1.9% growth in standard mail, a 0.7% increase in first-class mail and an 11% jump in shipping and packages, offset a 5.6% decline in periodicals.

In comparison, United Parcel Service Inc. UPS, -0.60% reported revenue growth for the quarter ended March 31 of 3.2%, while FedEx Corp. FDX, -0.40% said revenue for the quarter ended Feb. 29 increased 8%.

Getty Controllable earnings, which are the equivalent of non-GAAP (generally accepted accounting principles) results, exclude what the post office describes as “operating expenses considered outside of management’s control.”

Public companies use non-GAAP results to strip out nonrecurring items, such as charges for restructuring or for the depreciation of assets, which they don’t believe represent the true performance of the company. Basically, controllable earnings are what would be compared with analyst estimates, if analysts followed the post office.

But when reporting GAAP results, the post office said losses widened to $2.04 billion from $1.47 billion a year ago. Included in the GAAP loss are “the legally-mandated expense to prefund retiree health benefits.”

Those expenses include workers’ compensation expenses of $948 million resulting from changes in the discount rate and $488 million for the actuarial valuation of new cases and revaluation of existing cases.

“While we have been successful in achieving controllable income during the quarter, we are still reporting net losses and contending with long-term financial challenges,” said Postmaster General and Chief Executive Officer Megan J. Brennan. “Our financial situation is serious, but solvable. We are confident that we can return to financial stability through the enactment of prudent legislative reform and a favorable resolution of the coming regulatory review of our rate-setting system.”

In April, the post office was required by the Postal Regulatory Commission to remove the 2-cents-per-stamp surcharge it implemented a year ago to help fund operations, cutting the cost for a first-class letter of up to one ounce to 47 cents from 49 cents.

“Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition,” Brennan said in a statement in April. She said the current pricing regime “is unworkable and should be replaced with a system that provides greater pricing flexibility and better reflects the economic challenges facing the Postal Service.”

Since July 1971, the post office was established as an “independent establishment of the executive branch of the Government of the United States.” In other words, it became a provider of a government service, bound by previously-agreed-to government mandates for employee benefits, that would be run and report results like a publicly traded company.

from MarketWatch

Edit
So where does the money come from when the Post Office doesn't have enough money? Don't they have to recieve money from the tax payers? Just asking because I don't know.
CK

 

[Delta3DStudios]

Just to offer a different view, I am a huge fan of USPS. Without them, I wouldn't be able to easily and affordably ship to my customers. While priority shipping may cost over $6 to most customers, first-class shipping on my store can cost under $3 sometimes! That makes USPS shipping extremely affordable for small packages under 13 ounces.

Moreover, USPS shipments can be based on the weight of the package. This makes it easier for my store to calculate shipping to customers.

FedEx and UPS tend to base their rates on the size of the box and the estimated shipping weight (trust me, those bastards have charged my card an extra $8 because I used a larger box than stated).

USPS makes it easier for me to run my business. I might not be spending millions with them - but they're making thousands off me every year


(FYI - for those interested - I have a VERY low loss rate with USPS - somewhere around 1 in 2000 packages goes missing. More interesting is delivery rates - while First Class shipping *can* take longer, the average delivery rate for Priority is 3.2 days while First class is 3.5 days!!) - For anyone shopping my store, do yourself a favor and go with First-class shipping unless priority is required for your address! (such as my Hawaiin and Alaskan customers)

 

[Fat Freddy]

So where does the money come from when the Post Office doesn't have enough money? Don't they have to recieve money from the tax payers? Just asking because I don't know.
CK

Well, as I indicated earlier, the USPS generates revenue from charging for postage, goods and services, so if they are looking at a budget deficit they simply raise the rates on same. And, since the USPS is not required by law to balance their budget annually they are required only to have their revenue equal their costs over the "long term". There are however, what are referred to as "indirect subsidies" granted by Congress to the USPS, for the discounts the USPS provides to certain "needy" segments of our society. Those subsidies are ongoing federal budgeting points of contention regarding whether indeed the USPS is, or is not, supported by tax dollars -- "financial semantics" for the most part, I would suggest.

 

[gangababa]

Just FYI as this topic of discussion proceeds, is that
the Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

And we shall add, congress restricts the Post Office from adding probable profitable services in competition with 'private' businesses; imagine postal banking or FedEx office like services.

Perhaps the "grabbers of the commons" pirates would support total elimination of the PO and thus force UPS to drive out to the furthest boonies to deliver Amazonshit in two days.

 

[Tranquility]

Just FYI as this topic of discussion proceeds, is that
the Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

Except that they get to "borrow" money from the U.S. Treasury. ($3 billion a year.) There is a limit of $15 billion. Last year, the USPS lost $5 billion. They would have had a small profit if they did not have to pay up retirement benefits for pensions and medical care. Most say the borrowing limit will have to be raised or the USPS will face insolvency as the limit has already been reached. Revenue is expected to continue on a downward slope due to any of a number of factors. While the money is "borrowed", what do you bet any money loaned is g-o-n-e?

Some plans to "save" the USPS envision changing duties and responsibilities and allowing for more flexibility on the part of the managers to adapt the business and increase revenue by being a better and more efficient competitor as well as the ability to increase rates. (Something that may or may not increase revenue substantially.)

Personally? I think it unlikely a government-run bureaucracy like the postal service will ever really be able to compete with profit-focused private carriers. Private carriers will cherry-pick the best routes and don't have to deliver to BFE. The postal service, as currently envisioned, is always going to cost more than it takes in. From where will that money come?

 

[j-bug]

And we shall add, congress restricts the Post Office from adding probable profitable services in competition with 'private' businesses; imagine postal banking or FedEx office like services.

Perhaps the "grabbers of the commons" pirates would support total elimination of the PO and thus force UPS to drive out to the furthest boonies to deliver Amazonshit in two days.

Except that they get to "borrow" money from the U.S. Treasury. ($3 billion a year.) There is a limit of $15 billion. Last year, the USPS lost $5 billion. They would have had a small profit if they did not have to pay up retirement benefits for pensions and medical care. Most say the borrowing limit will have to be raised or the USPS will face insolvency as the limit has already been reached. Revenue is expected to continue on a downward slope due to any of a number of factors. While the money is "borrowed", what do you bet any money loaned is g-o-n-e?

Some plans to "save" the USPS envision changing duties and responsibilities and allowing for more flexibility on the part of the managers to adapt the business and increase revenue by being a better and more efficient competitor as well as the ability to increase rates. (Something that may or may not increase revenue substantially.)

Personally? I think it unlikely a government-run bureaucracy like the postal service will ever really be able to compete with profit-focused private carriers. Private carriers will cherry-pick the best routes and don't have to deliver to BFE. The postal service, as currently envisioned, is always going to cost more than it takes in. From where will that money come?

As gangababa pointed out the real reason the usps can't compete is because it is restricted from providing some of the more profitable services it could easily expand into to provide services its private competitors provide, in the areas it is allowed to compete it excels and significantly outcompetes its closest competitors as demonstrated by it being the choice of small business owners and entrepreneurs in this thread. The USPS is one of the most well run organizations in the USA private or public and if it weren't hamstrung (to allow the private competition a chance) it's completely dominate its market. Whether that's a good thing or a bad thing is debatable, but the United States Postal Service provides an effective, efficient, affordable and reasonably self sustaining service to US postal customers and it's pretty good at what it does do.

 

[Tranquility]

As gangababa pointed out the real reason the usps can't compete is because it is restricted from providing some of the more profitable services it could easily expand into to provide services its private competitors provide, in the areas it is allowed to compete it excels and significantly outcompetes its closest competitors as demonstrated by it being the choice of small business owners and entrepreneurs in this thread. The USPS is one of the most well run organizations in the USA private or public and if it weren't hamstrung (to allow the private competition a chance) it's completely dominate its market. Whether that's a good thing or a bad thing is debatable, but the United States Postal Service provides an effective, efficient, affordable and reasonably self sustaining service to US postal customers and it's pretty good at what it does do.

While one can put up any theory as to why the USPS is doomed, the fact is that without massive change it is doomed. Maybe it is doomed because they are one of the most well run organizations in the U.S.. I personally doubt that.

However, there is a bipartisan move to change the USPS to undoomed.
https://www.govtrack.us/congress/bills/114/hr5714

The Senate measure deals mostly with financial issues like the ones talked about here, while the house measure includes some actual operation reforms. (For instance, removal of door-to-door delivery. In some conditions, the service can reduce service to curbside and/or clustered service.) Nowhere do I see the removal of the USPS monopoly or other substantive changes that would make the service competitive with private industry.

 

[grokit]

I'm going with NO on 'privatized'; 'fully nationalized' might be another debate.

Along with non-profit 'community banking'.

 

[j-bug]

Oldnewbie, nothing you've said proves that it is doomed, what you've said only proves that you wish it didn't exist as a government service.

You've only pointed out short term budget issues in an agency that has a duty to exist and sustain itself over a longer period of time than quarterly, sometimes greater temporary expenses require lending or additional cash flow. I've seen no unbiased reports that the USPS is failing, I've seen only idealogically based arguments that are based in an idea that an organization needs to be profitable every financial quarter to justify it's existence.

The USPS provides a service, that is disproportionately used by small business and enterprise customers to their financial advantage, that creates significant economic opportunities for many as well as providing good honest work for a pretty significant chunk of people. I think that's something worth preserving whether or not they are able to cover their own costs going into the future, which is something we cannot at this point accurately predict.

You're arguing based on predictions that ignore what the fundamental function and duties of the United State Postal Service are and don't take into consideration the restrictions placed on them as outlined above by gangababa whose points you've entirely ignored. It's kinda hard to have a conversation when one party of the conversation just ignores what other people have contributed.

 

[Tranquility]

Oldnewbie, nothing you've said proves that it is doomed, what you've said only proves that you wish it didn't exist as a government service.

I don't think you know what I wish in regards to the USPS. I've only pointed out the math. Please re-read what I've written.

You've only pointed out short term budget issues in an agency that has a duty to exist and sustain itself over a longer period of time than quarterly, sometimes greater temporary expenses require lending or additional cash flow. I've seen no unbiased reports that the USPS is failing, I've seen only idealogically based arguments that are based in an idea that an organization needs to be profitable every financial quarter to justify it's existence.

This is no short-term budget issue. Both sides of the aisle are actually working together (In this environment.) to fix the very real problem. Compare the red with the green. http://www.zerohedge.com/news/2014-...s-past-decade-and-counting-44-billion-capital

The USPS provides a service, that is disproportionately used by small business and enterprise customers to their financial advantage, that creates significant economic opportunities for many as well as providing good honest work for a pretty significant chunk of people. I think that's something worth preserving whether or not they are able to cover their own costs going into the future, which is something we cannot at this point accurately predict.

We can predict it. Promise. While there are assumptions in budgets, it's still just math. You have to change some of the values in the formula to make the numbers different. Which trend will the USPS be able to change without structural reform? http://www.rstreet.org/2015/08/17/four-charts-explain-the-postal-services-financial-struggles/

You're arguing based on predictions that ignore what the fundamental function and duties of the United State Postal Service are and don't take into consideration the restrictions placed on them as outlined above by gangababa whose points you've entirely ignored. It's kinda hard to have a conversation when one party of the conversation just ignores what other people have contributed.

I agree I did not take into account the value of the USPS in my writing. There seem to be enough already focusing on that side of the equation. We know now that that focus will cost us at least $5 billion this year. Just like last year. If that money is not paid in now, the amount rises over time. Maybe universal service is worth that amount. That might be a discussion once all the smoke of bad facts gets blown away. I don't know.

What I do know is the current postal service as it is comprised is not Constitutionally demanded, certainly costs the U.S. money now and is not a little bump in the road.

 

[grokit]

From "What's Happening To The US Postal Service Is Totally Unfair"

Many believe the USPS is hemorrhaging money because it's an outdated, inefficient, and overly bureaucratic operation that should be privatized. The service definitely has its issues, but a close look reveals that the USPS deserves a lot more credit — and a lot less meddling from Congress.

The USPS:

• handles 40 percent of the world's mail while receiving no taxpayer dollars.
• is the core of the trillion dollar mailing industry that provides jobs for more than 8 million people.
• reaches every address in the nation, which comprises 151 million residences, businesses and P.O. boxes.
• is the second largest civilian employer in the U.S. after Walmart and has the largest remaining union.
• ranks as the fourth most trusted company in the U.S. and the most trusted government agency (for the seventh year in a row).
• has been required to break even since 1970 (unlike other government agencies such as the military).
• is the only federal agency or private company required to pre-fund retiree health benefits for 75 years, which means that it is required to pay $5.5 billion annually to the Treasury.​

Without having to pre-fund benefits — which began in 2006 — the USPS would have actually netted $1 billion in profits from 2006 to 2011.

http://www.businessinsider.com/whats-happening-to-the-us-postal-service-is-totally-unfair-2013-2

 

[Tranquility]

I'm certain many business would be more profitable if they did not have to pay for the promises they made to their employees.

 

[j-bug]

I'm certain many business would be more profitable if they did not have to pay for the promises they made to their employees.

They don't though. Most don't prepay their employees for future benefits.

That's the core of the problem.

Congress has forced the USPS to be non competitive and has effectively hamstrung them. The fix isn't privatizing them the fix is letting them actually be competitive and either requiring all companies and government agencies to prepay for and provide benefits like USPS does for its employees or not requiring that of the USPS. But doing that would hurt an awful lot more people than just removing that ridiculous burden from the USPS's ongoing expenses.

You're also dismissing in one sentence actual mathematical models that disprove or at least credibly contest the models you've provided.

 

[Tranquility]

They don't though. Most don't prepay their employees for future benefits.

That's the core of the problem.

Congress has forced the USPS to be non competitive and has effectively hamstrung them. The fix isn't privatizing them the fix is letting them actually be competitive and either requiring all companies and government agencies to prepay for and provide benefits like USPS does for its employees or not requiring that of the USPS. But doing that would hurt an awful lot more people than just removing that ridiculous burden from the USPS's ongoing expenses.

You're also dismissing in one sentence actual mathematical models that disprove or at least credibly contest the models you've provided.

The model that is from the USPS giving full funding already with no changes:
https://www.uspsoig.gov/sites/default/files/document-library-files/2015/ft-wp-15-003_0.pdf

 

[grokit]

75 years of advanced retirement funding is an unrealistic metric for any organization on earth.

Congress hamstringing the usps like that is an act of treason funded by fedex lobbyists.

It's also another salvo in their ongoing war against people of low income

 

[gangababa]

The Post Office, Social Security, all taxes except payroll, the Grand Canyon and more are all targeted by ongoing Republican-motivated fragging in the war they wage to lower income wages for all people; Chinese jobs now out sourced to Africa for the profit of Jobs, and Gates and it is not a Goodyear for natural persons and Uber employees replaced by Google drivers.

It is insanity to destroy all lively-hood and expect people to be able to continue sucking at the teats of the marketeers and merchandisers.
The rich of this town, profit from the students' need for shelter, over-build more housing, and think the increasingly homeless can be contained in the 'hood'; but no, their own up the hill neighborhoods will be picked over for the scraps of decadence and their gardens fertilized by homeless crap.

 

[Tranquility]

75 years of advanced retirement funding is an unrealistic metric for any organization on earth.

Congress hamstringing the usps like that is an act of treason funded by fedex lobbyists.

It's also another salvo in their ongoing war against people of low income

Do you think the USPS would agree to being removed from the statutory requirement to fully-fund retirement and medical for its employees in exchange for the removal of government guarantees to the funds?

Fedex would LOVE to penetrate the first class monopoly of the USPS. I alluded to it earlier. They would poach the best (most profitable) routes and leave universal service in the dust. This is not that.

 

[Tranquility]

The rich of this town, profit from the students' need for shelter, over-build more housing, and think the increasingly homeless can be contained in the 'hood'; but no, their own up the hill neighborhoods will be picked over for the scraps of decadence and their gardens fertilized by homeless crap.

"The law in its majestic equality
Forbids the rich as well as the poor
To sleep under bridges
To beg in the streets
And to steal Bread"
--Anatole France (The Red Lilly 1894)