Fredric Rolando: The truth about the Postal Service
01:00 AM EDT on Tuesday, August 2, 2011
By Fredric Rolando
Few institutions touch more Americans than the U.S. Postal Service, which six days a week delivers mail to 150 million homes and businesses in big cities and remote areas. And we do more than link the country; we become part of local communities, getting to know our customers and occasionally saving elderly residents who are ill, finding missing children, putting out fires and more. In our spare time, we conduct America’s largest single-day food drive, replenishing food pantries in your community in tough times.
That degree of familiarity and personal interaction is why the amount of misinformation floating around about the Postal Service is so counter-intuitive. There’s plenty of room for differing ideas about public policy, but we should all start from a factual basis — something too many columnists and commentators with an ideological ax to grind fail to do.
We can’t change the habits of the news media, but we can provide people with accurate information. So the next time you read screaming headlines about multibillion-dollar losses or taxpayer bailouts, you’ll know the real story.
For starters, the Postal Service doesn’t use a dime of taxpayer money and hasn’t for more than a quarter-century. Its revenue comes from the sale of its products and services.
And these are delivered to homes and businesses at the best rates in the world, despite the size of our country compared with many postage-stamp-sized — pun intended — nations.
If any of that surprised you, this may shock you: The Postal Service, whose existence and duties are set forth in the Constitution, runs a net operational profit delivering the mail. You read that correctly. Even with the worst recession since the 1930s, even with Internet diversion, the Postal Service takes in more money from its postal operations than it spends. Over the last four years, revenues derived from delivering the mail exceeded costs by $837 million; last quarter’s net operating profit alone was $226 million.
What about those news reports of multibillion losses? Well, the $20 billion in losses over the last four years has nothing to do with what you’ve been told about a failing business model or obsolete mail. Here’s the real skinny:
In 2006 Congress mandated that the Postal Service pre-fund future retiree health benefits for the next 75 years, and do so within a decade — something no other public agency or private firm does. The resulting annual payments run $5.5 billion a year, costing the Postal Service $21 billion since 2007. That’s the difference between a positive and a negative balance sheet, as it would be for virtually any entity facing a similar burden — if any did.
Remove that unreasonable obligation and the Postal Service would have been profitable.
But we’re not even asking that it be removed. What Postal Service management, the unions, the Postal Regulatory Commission, key Republican and Democratic legislators on postal issues, and other stakeholders ask is simply this: Let the Postal Service stop depleting its operating funds to make these payments, and instead permit an internal transfer of funds from its pension surpluses — as any responsible business would do.
This is Postal Service money earned by the sale of products and services, with zero taxpayer involvement. Making such a transfer would still leave both funds — pensions and retiree health benefits — fully funded well into the future, while putting the Postal Service operational budget back on sound financial footing on paper — as it’s been all along in practice. Bills filed in Congress, by legislators from both parties, would accomplish just that.
Once this immediate financial hurdle has been overcome, the entire postal community can focus on how we continue adapting to society’s evolving needs in the age of the Internet, which offers both challenges and opportunities. For example, more people now pay bills online, but they also order online — and those goods must be delivered.
Already, last-mile delivery of packages for Federal Express and United Parcel Service is one of our fastest-growing and most-profitable activities, because the Postal Service can do it more inexpensively given the extent of our universal network.
Since the days when Benjamin Franklin served as the nation’s first postmaster general, the Post Office (now Postal Service) has been adapting, and it will keep doing so. As part of that process, letter carriers will continue to devise proposals for a Postal Service that serves ever better the needs of residents and businesses, even as we carry out our jobs with the dedication and professionalism that have led the public to name us the nation’s most-trusted federal workers six years in a row.
And columnists seeking to sensationalize, mislead and denigrate everything government does will have to look elsewhere to accomplish their narrow ideological aims.
Fredric Rolando is president of the National Association of Letter Carriers.