Wednesday, September 7, 2011

The US Post Office Problems and What's Really Causing Them.

I'm sure you've all heard the US Post Office is on the brink of default. Of course, they've been trying to privatize it for many years. But few people really know the US Post Office history. 

In 1775, Benjamin Franklin was the  first Postmaster General under the Continental Congress. It was established according to the postal clause in article one of the US Constitution and became the Post Office Department. It operated in much the same way until 1971. 

The Postal Reorganization Act of 1970 abolished the United States Post Office Department, a part of the US cabinet, and created the United States Postal Service, a corporation-like independent agency.  Pub.L  91-375 was signed by President Nixon on August 12, 1970. The Act also called for the Post Office to be self supporting. So, it has been since that time. 

Going back to 1969, there was an outcry that the postal service spent too much money, needed to "run like a business" they know the drill. So they changed all that but they're ready to take it to next level.  Instead of a quazi-governmental agency, they would like to fully privatize it now. And people would always believe it's government run.  Think of all the other quazi-governmental agencies like Fannie Mae, now completely private corporations. That didn't go well at all, let's not do it to USPS. 

The recent problems with money-where did those come from? Well, it made sense when people said "email and the internet" but wait a minute. Under G.W. Bush in 2004, it was mandated that USPS pre-fund 75 years of retirement contributions in 10 years. Think about that. Imagine your employer said you must fund your entire retirement in 10 years. My retirement calculator won't allow a 75 year timeline so I chose 40. To save $500,000 in 40 years at 5%, you would need to deposit $338.81 a month. Now, just changing the timeline to 10 years-you would need to deposit $3,342.63  a month. And then it would sit there and gain more interest because you don't need it for many more years. Fredric Rolando said on PBS:

During the last four fiscal years, the Postal Service, with the recession that we have been through, the worst recession in 80 year, and the Internet diversion, still showed an operational profit of almost $700 million during that period of time. The $20 billion-plus dollars that you read about in losses is nothing more than a congressional mandate that requires the Postal Service, required the Postal Service to take all of their cash and put it into a pre-funding account.
The Postal Service actually has somewhere between $50 billion and $125 billion in their other funds that is not taxpayer money. They haven't used a dime of taxpayer money in over 30 years. And the Congress just needs to act responsibly and quickly to give them access to that -- those funds. 

And then I thought I'd check to see what the salary might be of our illustrious Postmaster general. You might be surprised to know he makes more than $800,000.  Senator Jon Tester in Montana would like to know why. (He is facing a Senate battle against money and power).  

 (U.S. SENATE) – U.S. Senator Jon Tester is demanding to know why the head of the U.S. Postal Service made $800,000 in total compensation while eliminating local Montana positions as the organization is dealing with a multi-billion-dollar shortfall. 

I would love to know why, myself. More than the President....turns out the "Postmaster" is actually a CEO, with "additional compensation". $

As a US expat in  Chile for three years, I can tell you Chile's privatized, Friedmanesque, "free market" experiment  failed and is especially evident in their post office (Correos). Some expats there did a little experiment and it took three weeks to send a package from one end of the country to the other. Do expats recommend Fedex or UPS in Chile-NO! They are predictably terrible there. Since there is no competition from the post office there, they are the only game in town. 

I asked a Chilena friend about the post office and mailing a package and she exclaimed "Oh Laura-no one uses the post office here! Send it on a bus". (People go to the bus and pick up packages). Expect things to go that way here as well. Not quite the Pony Express but rather close.  

One more thing, I loved my letter carriers both here in the US and in Chile. Jorge on his little red motorcycle (you have to pay for your mail there so give them a tip!). My mail carrier here brings the package to the door, with a smile and remarks I have a new cat. Letter carriers have saved lives-they are the ones walking the neighborhood. I'm not kidding, google 'letter carrier saves life' and you will find 2 million results. 

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