Back to Basics

The Senate Majority Leader is fighting to make sure the junk mail on which so many seniors depend doesn’t wither on the vine:

In his opening speech on Wednesday, Reid called on the Senate to quickly move forward on the passage of S. 1789, the 21st Century Postal Service Act, which restructures pension plans for Postal Service employees as well as allows the USPS to access overpayments in the Federal Employee Retirement System.

“Madam President,” Reid said to Sen. Kirsten Gillibrand (D-N.Y.), the presiding officer of the Senate, “I’ll come home tonight here to my home in Washington and there’ll be some mail there. A lot of it is what some people refer to as junk mail, but for the people who are sending that mail, it’s very important.

“And when talking about seniors, seniors love getting junk mail. It’s sometimes their only way of communicating or feeling like they’re part of the real world,” Reid continued. “Elderly Americans, more than anyone in America, rely on the United States Postal Service, but unless we act quickly, thousands of post offices … will close. I’ve said this earlier today; I repeat it.”

Why am I guessing that the “junk mail” Reid is worried about being delivered to his elderly constituents are the letters from Harry Reid’s office?

By the way, here’s Reid’s upcoming mailer:

Don’t let the Republicans do this to the junk mail of America’s seniors!

Hopefully, this bailout will cost something less than the $100 billion spent to bailout GM. From the WSJ:

The National Association of Letter Carriers said it retained Ron Bloom, the president’s former “car czar” who orchestrated the bailout and restructuring of General Motors Co. and Chrysler LLC, and led the Treasury’s oversight of the companies.

The union also has hired investment bank Lazard Ltd., assembling a restructuring team experienced in analyzing large, complex, financially troubled institutions and proposing solutions.

The hiring of Lazard and Mr. Bloom indicates that rather than absorbing the massive job and infrastructure cuts being proposed by the postal service, the union is aiming instead for a role in the public-policy debate over how to prevent the collapse of the age-old institution and remake its business model for modern America.

The letter carriers say they have no choice but to go on the offensive. As part of its strategy to right itself, the postal service is aiming to slash $20 billion in expenses by 2015 by closing many post offices and mail-sorting centers, dropping Saturday delivery and eliminating 220,000 jobs, despite collective-bargaining agreements limiting layoffs. The agency is appealing to Congress to change laws so it can rapidly make these cuts. . . .

Here is another useful example of a corrupt public employees union interfering in the efficiency of an institution to benefit itself and its members.

The simple fact is that the United States Postal Service cannot compete with other information carriers without government subsidies. Why would anyone in their right mind use the Postal Service for critical packages over United Parcel Service or Federal Express? Why would anyone send a letter when they can pick up a telephone, send a text message or video conference?

While there is a need for continuing postal delivery – it is no longer about subsidizing the direct mail industry and the billing industry. It is no longer about onerous workrules which prevents the Postal Service to discontinue service to unnecessary post offices – or combining post offices to obtain efficiencies of scale. IT IS ABOUT POLITICS AND THE VARIOUS POSTAL UNIONS.

Creating another crisis …

“Postal Service Is Nearing Default as Losses Mount”

“The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.”

Does a great portion of this payment have to do with health, welfare and pension benefit payments to the various unions?

“In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.”

A much better idea …

“Eliminate the postal workers union. Convert all pensions to 401(k) plans like those found in the public sector. Streamline work rules and fire those who can no longer perform their duties in an efficient and competent manner. Make the employees pay a portion of their health and retirement benefits commensurate with those ratios found in private industry.”

The hard reality …

“The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.”

“As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.”

So why does the United States Postal Service continue to support a dying business model? Why did they not opt to become an electronic certificate authority which would have generated substantial income – with fewer personnel requirements?

So why does the United States Postal Service continue to be enthralled with the public employee unions who have seriously damaged their ability to serve the public?

“At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.”

Enter the politicians with their hands out for 2012 campaign funds from the unions …

“’The situation is dire,’ said Thomas R.

Given all the regulations imposed on all sorts of companies, I am sure that a lot of them would appreciate the tax and other benefits given to the USPS. One thing apparently not included as a government subsidy is the monopoly that the government gives the USPS for first class mail delivery. The Union though wants to convince people that the USPS wants to “dispel the persistent myth that our work is funded by taxpayers.” If Obama wants to get rid of tax subsidies, this might really be one place to start. From Fox News:

The postal workers union is refusing to take down a new ad after Republican Rep. Darrell Issa accused its members of “misleading” viewers by claiming tax dollars do not support the Postal Service.
“The ad is accurate,” Sally Davidow, spokeswoman for the American Postal Workers Union, told FoxNews.com.
The TV ad, which started running this week, has a voiceover claiming U.S. mail delivery doesn’t cost taxpayers a “single cent” and is “funded solely by stamps and postage.”
The problem with that statement, according to Issa, is that the Postal Service enjoys other “implicit subsidies” — a 2007 Federal Trade Commission report noted that the service does not have to pay taxes, including property tax; does not have to pay vehicle registration fees, and can borrow at low-interest rates through the U.S. Treasury. . . .
Indeed, the FTC report estimated that federally imposed restraints on the Postal Service — as of fiscal 2006 — cost between $330 million and $782 million annually, while the special benefits were worth between $39 million and $117 million.
Davidow suggested the benefits were justified and didn’t undermine the union’s claim about being unsupported by tax dollars. . . .

Postal workers using government vehicle for an afternoon excursion. Credit: NewswithViews

With almost a $9 billion deficit, the U.S. Postal Service may soon need a taxpayer funded bailout, yet the federal agency blew hundreds of thousands of dollars on professional sports tickets, booze and fancy meals, according to a public-interest group that investigates and prosecutes government corruption.

The items were purchased by USPS managers and employees with special charge cards issued to U.S. government agencies. More than 3 million federal workers nationwide have the cards and they charge around $30 billion annually, according to the U.S. General Services Administration.

Despite its monstrous financial troubles, the USPS is known to rack up big-time expenses as if it were a major corporation with lucrative profits. In fiscal year 2010 the agency charged more than $239 million on the government-issued plastic, according to Judicial Watch and federal auditors.

This week the USPS Inspector General revealed that agency policy was violated in at least $400,000 worth of charges that were not properly authorized or justified. Among the items purchased were expensive season tickets to professional basketball, football and baseball games, gift cards, beer, wine and unjustified “business meals.”

In a report, the Inspector General points out that it’s the third “focusing on purchases that could negatively impact the Postal Service’s public image and brand.” Two previous audits found similar wrongdoing and investigators seem to think the problem will magically get solved, according to Judicial Watch’s Tom Fitton.

A 2009 IG report determined that USPS employees were continuing to make “imprudent an unnecessary purchases during a time of severe economic uncertainty in the postal service. “ In 2008 investigators said cardholders didn’t verify charges, made purchases from unauthorized vendors and failed to follow proper procedures when making purchases.

All this occurred while the agency suffers through a dire financial crisis that’s been years in the making. The chief of the USPS recently said it’s facing at least $8 billion in losses for the second consecutive year. One U.S. congressman is calling on fellow lawmakers to “establish a mechanism to prevent the sort of poor management and fiscal irresponsibility that has beset the USPS’s transition into the digital age.”

The post office has a government guaranteed monopoly on first class mail, but even with a monopoly it can’t make money.

The U.S. Postal Service continues to hemorrhage money, with a loss of $2.2 billion in the most recent quarter.
The national mail service said Tuesday that it expects to have a cash shortfall and reach its statutory borrowing limit by the time its fiscal year ends in September. That means the agency could be forced to default on some of its payments to the federal government. . . .

Here is an article that suggests privatization.

The U.S. Postal Service is losing money so quickly you’d think it somehow got mixed up in the subprime mortgage business. It’s on track this year for an operating loss of between $6 billion and $12 billion, debt surpassing $10 billion, and a $1 billion cash shortfall. For any business, those are some ugly numbers. . . .

But here’s how the USPS is not treated like everyone else: It’s exempt from taxes and antitrust law. No one else is allowed to deliver first-class mail. Those are advantages, but on the other hand USPS is subjected to constant meddling from Congress — for instance, the postmaster general Jack Potter has to ask Congress for permission to reduce a six-day delivery schedule to five in order to save money. And these same politicians get an earful from constituents anytime a local post-office branch, no matter how unprofitable for the USPS, is threatened with closure. . . .

Germany’s Deutsche Post, which runs the DHL brand, has been private since 2000 and is now the world’s largest logistics group. The European Union is in the midst of privatizing the postal services of all its member nations. And in 2005, Japan approved the privatization of its postal service, Japan Post. . . .

Imagine an enterprise with a business plan aimed at containing losses, rather than building profits. That could apply to any business beholden to greedy labor unions, including the U.S. postal office.

As reported at CNN.com:

NEW YORK (CNNMoney.com)—The U.S. Postal Service more than doubled its losses in fiscal year 2010, despite cutting billions of dollars in expenses and trimming its staff.

The Postal Service said its net loss totaled $8.5 billion in the fiscal year that ended Sept. 30. That compares to a loss of $3.8 billion the prior year. Chief Financial Officer Joe Corbett said the losses were worsening despite cuts that generated cost savings of $9 billion over the past two years. Those savings came primarily from the elimination of 105,000 full-time positions—“more than any other organization, anywhere,” Corbett said.

As more communications go electronic, mail volume keeps dropping. The Postal Service delivered 170.6 billion pieces in its 2010 fiscal year, compared to 176.7 billion pieces the prior year. That decline cost the service around $1 billion in lost revenue.

“We will continue our relentless efforts to innovate and improve efficiency,” Corbett said. “However, the need for changes to legislation, regulations and labor contracts has never been more obvious.”

Having destroyed the U.S. automobile industry, Big Labor is once again working against the best interests of the working members it is supposed to serve.

Perhaps Labor Unions should be held accountable under anti-trust law?