What We Lose with a Privatized Postal Service

This op-ed was originally published by OtherWords

America's founders recognized that commerce requires a common infrastructure.

Did you know that when you ship a package through Federal Express, the U.S. Postal Service often carries it the last mile?

Last year, the Postal Service delivered 1.4 billion packages for FedEx and UPS. In fact, it delivers the last mile for almost a third of FedEx packages. The 618,000 Postal Service workers also delivered nearly 66 billion pieces of first-class mail — that’s more than 100,000 pieces per carrier.

The Postal Service can reach all 150 million American households because it’s a public system that we’ve been investing in for over 200 years. Our Constitution tasked the federal government with creating a national postal system and told the Postmaster General to report to the president.

But in 1971, Congress made the service into an “independent agency” managed by a board of governors. And since then, it’s been under attack by politicians who never met a public program they liked.

Yes, the rise of UPS, FedEx, and the Internet has created new challenges for your local post office. But the purported “fiscal crisis” is a manufactured one.

In 2006, Congress required the Postal Service — known as USPS for short — to “pre-fund” 75 years of its retirees’ health benefits. This added $5.7 billion to its costs last year.

No other private company or federal agency has to pre-fund retirement health care benefits. If they did, many corporations would run huge deficits or tumble into bankruptcy. Without these retiree health payments, USPS would actually turn a profit.

Using the deficit created by this requirement as an excuse, the USPS board of governors is closing distribution centers, cutting worker hours, eliminating delivery routes, and slashing jobs. Over the past five years, USPS has cut 94,000 positions.

The job loss alone is a travesty, but a bigger principle is at stake.

Our nation’s founders understood that a universal, affordable, and yes, public postal system helps knit us together as a nation. They recognized that commerce requires a common infrastructure and public institutions that belong to and benefit the entire country.

Instead of shrinking the Postal Service, we should build on it. That means, first of all, appreciating that the USPS can be much more than a delivery service.

In many small towns, the local post office continues to be a community hub, a place to meet neighbors and get news. And postal carriers don’t just deliver letters — they often keep an eye on the elderly and homebound, and alert first responders if things look amiss.

They could do even more. The Postal Service’s fleet of vehicles — the largest in the country — could be equipped to detect air pollutants and report potholes, water leaks, and other infrastructure repair needs.

Why stop there?

The USPS could raise tens of billions of dollars each year by reinstating post office savings accounts and banking services, which it efficiently provided for 55 years in the first half of the 20th century.

Customers received 2-percent interest on their savings accounts, and the post office loaned their money to community banks, which then made loans to local businesses. This virtuous circle benefitted the entire community. At its peak, 4 million Americans took advantage of these services, saving $36 billion in 2014 dollars.

Today, 34 million American families live in places without traditional banking services. High-interest payday lenders and check-cashing services charge low-wage working families in those communities an average of over $2,400 a year. Experts estimate that low-cost banking services could save American workers a trillion dollars a year.

Instead of selling off the assets we built together over two centuries, let’s invest in our Postal Service — a public system that has served our nation since its birth.

Katherine McFate is the President and CEO of the Center for Effective Government in Washington.

Distributed by OtherWords. Reprinted under a Creative Commons license.

Image by flickr user seandreilinger, used under a Creative Commons license.

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Wow! Someone actually gets it!
I'm not sure how low cost banking saves a trillion dollars a year when the estimate was that pay day lenders cost Americans $89 billion a year. Other than that the article is fairly well done. So why should the tax payer subsidize the postal service just like they do the police and fire departments. Those institutions are expected to make a profit. It would be a better return on investment than the subsidies that are given to the oil companies.
I'm not sure how low cost banking saves a trillion dollars a year when the estimate was that pay day lenders cost Americans $89 billion a year. Other than that the article is fairly well done. So why shouldn't the tax payer subsidize the postal service just like they do the police and fire departments. Those institutions are expected to make a profit. It would be a better return on investment than the subsidies that are given to the oil companies.
Excellent article. I echo Postal Pete: "Someone who actually gets it!" The unfortunate truth is that not only is the USPS fighting against the inane mandates of Congress, but also the ineptitude of unqualified top-level managers who are in way over their heads.
Why would ANYBODY want the Post Office to disappear? Do they WANT to pay more for the same thing? I get shipments all the time. I ALWAYS use USPS. They're better, cheaper, and just as reliable. The Post Office WORKS. And that's why some people hate it - BECAUSE it works. And thus demonstrates that their ideology - "Everything is better if it's profit-motivated" - is false.
Congress sucks!!!!! Jokers to the left and Clowns to the right, and here we are stuck in the middle!!!
Lovers of Our Founding Fathers and The Constitution have no reason not to love the post office too. Our Founding Fathers did and enshrined it in Our Beloved Constitution: Section. 8 of The Constitution: The Congress shall have Power to... establish Post Offices and post Roads.
Keep our USPS going.
This should be required reading for the American public! They don't realize what they would lose if they privatized the service. And yes, most of the crafts shake their heads in bewilderment at the way management has bungled everything they touch! Too bad they can't get rid of them or hold them accountable for their actions or plans.
not enough veterans hired and too many losers working there