Postmaster General Patrick Donahoe might have the worst job in America.
He is supposed to keep the vast U.S. Postal Service from going broke, while 535 members of Congress limit his options and their constituents take their business elsewhere.
Donohoe is doing the best he can under the circumstances. Last week the Postal Service filed a notice with the Postal Regulatory Commission requesting approval to close more than half of its 461 mail processing facilities. This will effectively end next-day delivery for some first-class mail. Reuters reported that postal officials hope to save about $3 billion annually by shrinking their network.
The Postal Service also wants to reduce delivery from six days a week to five, close 3,700 post offices nationwide and make deep cuts in the agency’s workforce. But these are the sorts of changes that require congressional approval, which is unlikely to come until the Postal Service has its back against the financial wall – and maybe not even then.
Donahoe told The New York Times that lawmakers have been unwilling to grant his request, or to entertain alternative plans. He said, “What I need Congress to do is act now to help me on the things they can help me on.”
For now, Donahoe’s only ally might be the regulatory commission. If the commission approves his proposal, the changes will go into effect next spring. First class mail will be delivered within two to three days, instead of one to three. Priority and Express Mail will not be affected.
The Postal Service cannot continue as it has. The Times reported that the agency lost $5.1 billion last year. Next month’s increase to 45 cents for a first-class stamp will not come close to making up that gap. Donahoe’s proposals may seem extreme to some, but the situation warrants extreme measures. The agency, which does not receive federal subsidies, is supposed to be run as a standalone business. Genuine businesses, though, do not need permission from Congress before they can close little-used, money-losing facilities.
Congress, however, has never been willing to relinquish its veto over Postal Service management decisions. The most stubborn lawmakers are those who represent rural states and districts, who complain that private delivery services and the internet cannot meet the needs of their isolated constituents, and that small towns that lose their post offices might as well be declared ghost towns. Yet those rural lawmakers see no reason why their constituents should pay the true costs of the level of postal service to which they feel entitled.
So Congress continues to demand results from Donahoe while it refuses to let him take the cost-cutting steps that any sensible manager would make. It would hardly be the end of the world to have mail delivered only five days a week. Slower service would mainly hurt publishers of daily newspapers and DVD-by-mail services like Netflix, not private citizens who vote.
What will happen if Donahoe is prevented from doing what he needs to do? Well, the Postal Service could go out of business. Presumably the powers that be will not let that happen, which means a federal bailout is probably in the Postal Service’s future, as I observed in this space nearly two years ago. It may take a healthy dose of taxpayer money – at a time of general budget austerity – to generate enough public concern about postal costs to force Congress to allow the Postal Service to put itself back on firm financial footing. To preserve his own sanity, however, Donahoe will have probably handed his thankless job over to someone else long before then.
Nothing much is likely to happen in the near future, while the Postal Service continues to muddle through more multi-billion-dollar annual losses. The agency can raise the cost of stamps, postpone payments to its employee pension plan, and close sorting facilities well out of the public eye. But these steps will just paper over the problem while Congress continues to make the Postmaster General’s job a waking nightmare.
Posted by Larry M. Elkin, CPA, CFP®
Postmaster General Patrick Donahoe might have the worst job in America.
He is supposed to keep the vast U.S. Postal Service from going broke, while 535 members of Congress limit his options and their constituents take their business elsewhere.
Donohoe is doing the best he can under the circumstances. Last week the Postal Service filed a notice with the Postal Regulatory Commission requesting approval to close more than half of its 461 mail processing facilities. This will effectively end next-day delivery for some first-class mail. Reuters reported that postal officials hope to save about $3 billion annually by shrinking their network.
The Postal Service also wants to reduce delivery from six days a week to five, close 3,700 post offices nationwide and make deep cuts in the agency’s workforce. But these are the sorts of changes that require congressional approval, which is unlikely to come until the Postal Service has its back against the financial wall – and maybe not even then.
Donahoe told The New York Times that lawmakers have been unwilling to grant his request, or to entertain alternative plans. He said, “What I need Congress to do is act now to help me on the things they can help me on.”
For now, Donahoe’s only ally might be the regulatory commission. If the commission approves his proposal, the changes will go into effect next spring. First class mail will be delivered within two to three days, instead of one to three. Priority and Express Mail will not be affected.
The Postal Service cannot continue as it has. The Times reported that the agency lost $5.1 billion last year. Next month’s increase to 45 cents for a first-class stamp will not come close to making up that gap. Donahoe’s proposals may seem extreme to some, but the situation warrants extreme measures. The agency, which does not receive federal subsidies, is supposed to be run as a standalone business. Genuine businesses, though, do not need permission from Congress before they can close little-used, money-losing facilities.
Congress, however, has never been willing to relinquish its veto over Postal Service management decisions. The most stubborn lawmakers are those who represent rural states and districts, who complain that private delivery services and the internet cannot meet the needs of their isolated constituents, and that small towns that lose their post offices might as well be declared ghost towns. Yet those rural lawmakers see no reason why their constituents should pay the true costs of the level of postal service to which they feel entitled.
So Congress continues to demand results from Donahoe while it refuses to let him take the cost-cutting steps that any sensible manager would make. It would hardly be the end of the world to have mail delivered only five days a week. Slower service would mainly hurt publishers of daily newspapers and DVD-by-mail services like Netflix, not private citizens who vote.
What will happen if Donahoe is prevented from doing what he needs to do? Well, the Postal Service could go out of business. Presumably the powers that be will not let that happen, which means a federal bailout is probably in the Postal Service’s future, as I observed in this space nearly two years ago. It may take a healthy dose of taxpayer money – at a time of general budget austerity – to generate enough public concern about postal costs to force Congress to allow the Postal Service to put itself back on firm financial footing. To preserve his own sanity, however, Donahoe will have probably handed his thankless job over to someone else long before then.
Nothing much is likely to happen in the near future, while the Postal Service continues to muddle through more multi-billion-dollar annual losses. The agency can raise the cost of stamps, postpone payments to its employee pension plan, and close sorting facilities well out of the public eye. But these steps will just paper over the problem while Congress continues to make the Postmaster General’s job a waking nightmare.
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