February 15, 2013
By James L. Gattuso
What did you get in the mail last Saturday? If you are like most people, you got a few advertising flyers, a few mass-mailed solicitations asking for donations, others telling you can save on car insurance. There may also have been a couple of bills, which - if you're like a growing number of Americans - you had already received online. For most people, this uninspiring haul is hardly the highlight of their day.
Yet when the U.S. Postal Service announced recently that it would be ending Saturday delivery of letter mail this August, an uproar ensued. Opponents, including many members of Congress, expressed outrage, claiming it would cause hardships for postal customers and destroy an American tradition going back to Benjamin Franklin. (Never mind that free mail delivery outside of major cities wasn't even offered until the 20th century.)
Despite all the sound and fury, the move is a necessary one, and only one small step toward the transformation necessary to allow the Postal Service to survive in today's world. The question now is whether Congress will let those necessary changes take place or block them, dooming USPS and putting American taxpayers at risk.
Under the Postal Service's plan, letter mail would be delivered only on weekdays, instead of Monday through Saturday as is current practice. Package delivery would continue on a six-day-per-week basis, with post offices remaining open on Saturdays as well.
It's a common-sense change and one the Postal Service can ill-afford to put off. USPS is drowning in a tsunami of red ink. It has suffered losses for six consecutive years, losing almost $16 billion last year alone.
These losses are not, as some have argued, simply a temporary hiccup due to poor economic conditions or problems in pension accounting. The cause is much more fundamental: the Internet. email, online bill payment, and other services are displacing mail at a startling rate. In the last five years alone, the number of first-class letters mailed has plummeted by over a third.
The $2 billion saved by reducing Saturday service is only a fraction $20 billion Postal Service estimates it needs to break even going forward. Within 15 years, the postmaster general has predicted, delivery may be limited to as few as three days per week.
Politically, however, the service cuts are a hard sell. Prior efforts by the Postal Service to end Saturday delivery hit a brick wall on Capitol Hill, as have other reforms. Legislators even inserted a ban on dropping Saturday service into the appropriations bill.
Given this, the Postal Service's decision to announce the cutback as a done deal - rather than simply ask permission to make it - is significant. It was a metaphorical finger in the eye of its congressional critics. It won't make it a lot of friends on Capitol Hill, but sends a strong message that it is serious about reform and will be moving forward with necessary changes even in the face of congressional opposition.
The Postal Service has not yet explained what it will do if Congress renews the current ban on service changes. One possibility is that it will simply decline federal funding, which totals less than $100 million, one-twentieth of the estimated savings.
Of course, cost-cutting is only part of the answer. It also must define a new role for itself in today's digital world. Americans are not going back to writing letters anytime soon - the Internet is here to stay.
The Postal Service is in the same position as Kodak, Smith-Corona and many other firms whose products were made obsolete by digital technologies. Like them, the Postal Service must now develop a new business model. Whether that is package delivery, real estate or something else entirely. That, however, is a job that requires the skills of an entrepreneur, not politicians. And such entrepreneurs are rarely found in government agencies, or on Capitol Hill.
The outcome of the Postal Service's battle to survive is far from clear. Americans' shift to the Internet shows no signs of slowing down. The good news is that the Postal Service - long a metaphor for inefficiency and mismanagement - seems willing to make the unpopular decisions necessary to deal with the new environment. Unfortunately, the same cannot be said of Congress.
-James Gattuso is senior research fellow in regulatory policy at The Heritage Foundation.
First moved by the McClatchy-Tribune News wire.
Enterprise & Free Markets Initiative of the Leadership for America Campaign
James L. Gattuso
Senior Research Fellow in Regulatory Policy
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