usps

The USPS Mess

Posted on by thependulumswings staff

The BBR staff has been rolling through some states in the Deep South for the last few days.   While there we managed to take only a glimpse at the news.  And, voila, it seems like the “deep state” is alive and well.

The quest to oust Trump is nearly four years old and going strong.  It sounds like the plight of the United States Postal Service is the latest raging problem that the left is placing the blame for at the feet of the President.

It’s so bad that Trump’s two months ago appointed Postmaster General Louis DeJoy will be beaten up like a USPS package by the time he is finished testifying before Congress next week.   Nancy Pelosi is so concerned about the Post Office all of a sudden that she decided to call the House back to Washington and back to order.  The House hasn’t been in order in years, but we digress.

TV networks will cover it like it’s the next Russian Collusion.  And, that’s because it is.  The Post Office’s problem isn’t Trump.  The Post Office’s problem is the Post Office.  And, it’s been that way for a long time.  Actually, it’s been that way for far too long.  A few facts, none of which will be brought up by the left as the excoriate DeJoy follow.

The Post Office, if it were a business would be out of business.  It’s insolvent and has been for a long time.  It lost 2.2 billion dollars last quarter to add to the 78 billion its lost since 2007. The government’s own Accountability Office wrote a May report and said that “the USPS current business model is not financially sustainable.

The Wall St Journal article last week called it a Blockbuster service in a Netflix world.  That about sums it up, doesn’t it?

In 2006 mail volume peaked at 213 billion pieces.  It’s down 33% and counting as of last year from that high.  But, during that same time frame, the number of delivery points (addresses) served by them increased from 146 to 160 million.   In other words, costs continue to rise while revenue shrinks.  Hello?

Walk-in retail customers are down 23% from the 2010 all-time high.  During that same time, USPS locations shrunk only 4%.

They have an exclusive right(monopoly) to your mailbox that carries a universal obligation or promise to carry a letter anywhere for 55 stinking cents.

One route in Montana serviced 6 days a week like all others, covers 191 miles to hit 272 mailboxes.  In extreme northern Arizona, mules take mail down an 8-mile path to the base of the Grand Canyon.

The USPS workforce is 600k people strong and organized by seven different unions.  Congress in 2013 rejected a proposal to save 2 billion a year back then and in every subsequent year by stopping Saturday regular service.  And, remember next week, this will all be the current administration’s fault.

The USPS retiree health care plan has billions to invest but is mandated to invest those Washington’s only in U.S. Treasurys.  Ten-year Treasury note returns have been falling for years and return about 1/2 of 1% per annum currently.  Do you think health care costs only rise by about 1/2 of 1 percent per year?  If so, we have a jackass to sell you that walks 16 miles a day in the Grand Canyon.

DeJoy reassigned 23 top-level managers while citing a substantial decline in volume, a broken business model, and a management strategy that has failed to address these issues.  It sounds like he is doing his job, so it’s no wonder Congress is mad.

Let the conspiracy theories begin.  Former President Barrack Obama said last month that “those in power are undermining the Postal Service in the run-up to the election that is going to be dependant on mailed-in ballots.

The Democrats, in their latest House relief bill, want to give the Post Office $25 billion to compensate for “revenue forgone due to coronavirus.”  The sickness of the financial state of the post office isn’t due to coronavirus.  It’s due to Al Gore’s invention called the internet.

What the USPS needs is major reform at a minimum.  Would you mind if your mail only came three days a week as but one example?

That will be lost in the name blame game next week.  The House will kick DeJoy around, blame Trump, and kick the mailbox down the road.

 

Neither Snow nor Rain nor Bailout

Posted on by thependulumswings staff

Every time the sky is falling our trusty government steps in to help.   It means well we assume.   But, we should expect so much more.  Shouldn’t we?

After 9/11 we got an entirely new department.  The Transportation Security Administration (TSA) was born.  And nearly 20 years later we have tables that look like they were purchased at Walmart that have tubs that look like they were purchased at Walmart lined up to take an image of our belongings.  We have see-through machines that can see through our clothing as well.  And we have TSA employees that would struggle to be hired at Walmart telling us what to do.

Every time they run a security test on their own various screening methods they fail miserably.  Do you feel safer?  Isn’t there a better way?

After the financial crisis, driven largely by dicey mortgage loans packaged as investments, we got the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Dodd-Frank reorganized the financial regulatory system, eliminating the Office of Thrift Supervision, assigning new responsibilities to existing agencies like the FDIC, and creating new agencies like the Consumer Financial Protection Bureau (CFPB). The CFPB was charged with protecting consumers against abuses related to credit cards, mortgages, and other financial products. The act also created the Financial Stability Oversight Council and the Office of Financial Research to identify threats to the financial stability of the U.S., and gave the Federal Reserve new powers to regulate systemically important institutions.  Did you get all of that?

The interest rates on credit cards remain 18% plus ten years later.  How is that for protecting consumers against abuses?  Apply for a mortgage and you’ll see at least three times the paperwork to get to the same spot.  You sign and you owe.  You owe and the bank collects.  You default and they take your house.

Now here comes the enemy that we cannot see.  And here comes the United States Postal Service(USPS) with their left hand on the mail and their right hand out.  USPS has lost $69 billion over the past 11 fiscal years. USPS’s total unfunded liabilities and debt ($143 billion at the end of the fiscal year 2018) have grown to double its annual revenue.

“The Postal Service is in need of urgent help as a direct result of the coronavirus crisis. Based on a number of briefings and warnings this week about a critical fall-off in the mail across the country, it has become clear that the Postal Service will not survive the summer without immediate help from Congress and the White House,” House Oversight and Reform Committee Chair Carolyn Maloney (D-N.Y.) said.

So, what happened?  Trump threatened to veto the CARES Act if it included USPS bailout money.  Instead, the government granted them a $10 billion loan.  Nevermind that the USPS has failed on numerous occasions in the last several years to repay a nickel of it’s current $13 billion U.S. government loan.

So should we expect so much more from the government?  Or in this instance should we expect so much less?  The virus is only yet another symptom of the illness that plagues the post office.  Al Gore’s internet created multiple avenues to reach consumers that used to get the solicitations in the mail.  Magazines, catalogs, and newspapers are more virtual than printed.  Bills?  Try online banking, please.  What’s left that Amazon Prime, FedEx, UPS, or countless other delivery services can’t handle?

At a minimum can the USPS deliver three times a week vs. the current six?  If your “revenues” are cut in half why not cut your expenses in half? If your mail comes to a box versus to your house, how often do you go get it anyway?

Why not?  If the government continues to bail out a very tired business model is “why not.”

Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”  Nor a lack of government funding.

Just this one time, when the sky is falling, could we do better by doing less?