USPS Loses Another $2.2 Billion: What Congress Can Do

James Gattuso /

Is the end near for the U.S. Postal Service (USPS)? Things have been pretty glum over the past few years, as the government-owned organization has reported loss after loss. The latest hit? A whopping $2.2 billion for the second quarter. That follows a loss in fiscal year 2010 of some $8.5 billion.

And if there is a light at the end of the tunnel for USPS, it’s an oncoming train, as it projects that by September it will run out of cash and default on a payment owed to the U.S. Treasury for retiree benefits.

You don’t have to go far to see the reason USPS is in trouble. It’s the computer or mobile device you are looking at right now. Simply put, the post office is on the wrong side of the information revolution. As broadband and other digital technologies become increasingly available, mail is used less and less. E-mail, online bill payment, and even digital greeting cards are taking the place of paper and stamps. The trend is clear: First-class mail volume has shrunk 20 percent since its peak in 2006, and the fall shows no sign of stopping.

This doesn’t necessarily mean that mail service will go the way of the buggy. There may very well be a use for hand-delivered paper going forward. And package delivery is up in today’s Amazon.com-fueled economy. But there’s no doubt the nature and scope of mail delivery will change dramatically.

The question is whether USPS can keep up with those changes. And, while the phrase “post office” has long been a metaphor for “appalling inefficiency,” USPS management has done a credible job in reducing costs and improving productivity over the past few years. But much more is necessary.

In several key areas, however, USPS lacks the ability to make the changes that are needed. It is, for instance, prohibited by law from closing individual post offices simply because they are losing money. Congress is also keeping USPS from dropping Saturday delivery, although that step would save close to $2 billion a year.

At the same time, USPS should also be stripped of its special marketplace privileges, including its monopoly on First-class mail. If someone is willing and able to make a profit in this shrinking market, they should be encouraged, not jailed for it.

The future of USPS and mail delivery is not bright. As digital technology continues to advance, USPS will continue to struggle to find a place for itself. Congress, however, is making that struggle even harder by hobbling USPS’s ability to cut costs and by banning competition. Mail service may lose its race for survival, but it should be allowed make a run.