Pawlenty’s really bad answer to USPS woes
Speaking at the University of Chicago June 7, former Minnesota Gov. Tim Pawlenty cited the USPS, among other agencies, as a prime candidate for privatization, and said it was, “built for a time in our country when the private sector did not adequately provide those products. If you can find a good or service on the Internet,” he added “then the federal government probably doesn’t need to be doing it.”
To some, Pawlenty’s idea may seem reasonable, as companies like FedEx, UPS, or Joe’s Delivery would fill the void. But if you consider what turning over the nation’s mail system to private, for-profit operators would mean to the nation’s citizens and businesses, the prospect becomes chilling indeed.
The Postal Service has served the nation well for more than 230 years, adapting to new technologies and means of transportation while providing universal service at uniform rates. This means that no matter where we mail a document or package, the cost of postage and the service are the same.
This reliability is possible only if the USPS maintains a nationwide retail-and-delivery network in every American community: Large or small, urban or rural, rich or poor. Some politicians may argue that the Postal Service loses money by serving less profitable communities, but in reality, we all benefit from universal service. Need to send mail to a small, rural community? Chances are, only the USPS delivers there. The alternative is to pay a much higher fee to a private company, such as UPS or FedEx, who would eventually give the package to the USPS for delivery.
Turning the entire mail system over to private operators would mean the end of universal service and uniform rates, leaving the nation’s citizens and business to navigate a confusing patchwork of private delivery services with exorbitant rates and limited service – private delivery operators would only serve communities deemed profitable.
To send a greeting card from Washington D.C. to Detroit for arrival in about two days through the Postal Service costs just 44 cents; UPS would charge $19.60, and FedEx, $16.89.
Similarly, to send a three-pound package from Washington D.C. to Detroit and for arrival in about two days via USPS Priority Mail costs as little as $5.20. UPS would charge $18.10; FedEx would cost $21.38.
In a tight economy, think about what this added cost would mean to postal customers who rely on affordable, dependable mail delivery, such as citizens who depend on the USPS to deliver bills, checks or medications; those who lack transportation to alternative facilities outside their neighborhood, and the millions of Americans who lack access to the Internet at home.
The economic downturn has hurt the Postal Service too, as many businesses have cut back on mailing expenses, but the true cause of the Postal Service’s financial crisis is an unreasonable congressional mandate that requires the agency to pre-fund healthcare benefits for future retirees – including workers that have yet to be hired. No other government agency or private business bears this burden.
The pre-funding requirement means that before the USPS sells its first stamp, it begins each fiscal year more than $5 billion in debt. Absent this burden, the Postal Service would have accumulated a $611 million cumulative surplus over the past four years – despite declining mail volume amid the recession.
At the same time, two independent actuarial studies concluded that the Postal Service has overfunded federal retirement accounts by $50 billion to $75 billion over several decades.
Legislation is now pending in Congress to correct these overpayments, which threaten to bankrupt the Postal Service by July 2012. H.R 1351, for instance, would allow the USPS to use overpayments to its pension accounts to meet the pre-funding obligations. The USPS will continue to adapt to the changing business climate and remain a vital public service agency – provided Congress repeals the devastating pre-funding requirement that is driving the agency to insolvency.
One would hope that a prominent politician like Mr. Pawlenty would have a clearer grasp of the role the USPS plays in our nation’s economy before issuing calls to dismantle it.
Guffey is President of the American Postal Workers Union, which represents more than 220,000 postal workers and retirees.