It has long been known that the United States Postal Service, in its current money-losing format, is unsustainable. The media has reported in the past that in order for this bloated government anachronism to be remotely competitive in the age of email and FedEx, it would need to cut hundreds of thousands of its workers. Even the USPS, via its largest union, the National Association of Letter Carriers, has admitted that the organization will need to undergo “tough sacrifices” although as the WSJ noted, “It didn’t specify what concessions it would seek from members.” And this is where it gets fun: because “just the tip”, or even just talking about the tip, apparently is more than labor unions in this country can stomach. Enter Ron Bloom, Lazard, and the very same crew that ended up getting a taxpayer funded bailout for GM. From the WSJ: “The Postal Service’s proposal to close thousands of post offices and cut back on the number of days that mail is delivered “won’t work” and would accelerate the agency’s decline, according to the six-page report by Ron Bloom, President Barack Obama’s former auto czar, and investment bank Lazard Ltd., LAZ who were hired by the union in October.” That’s right: after all the huffing and puffing about “sacrifice” and austerity, the labor union took one long look at the only option… and asked what other option is there.
“Instead, the report says, the agency should raise its stamp prices, which are among the lowest in the world, and find new ways to profit more from its built-in advantage as the only entity to reach every American home every day.” Well that… And the internet. “It should also replace its multi-layered governance system with a corporate- style board of directors whose members have entrepreneurial experience.” Translation – let’s just continue doing what we do, but kill demand for our services even more, because it is not the massively bloated expense side of the ledger that is the issue, it is how much the USPS charges. And apparently in mailman econo-logic, increasing prices leads to increasing demand, all else equal. At least this bailout plan came in 6 pages, as opposed to the 3-page one penned by Hank Paulson. Yet the kicker is that the “other option” is well-known: taxpayers get to fund another wholesale bailout of yet another worthless, ineffective government organization. But hey: there are hundreds of thousands of labor union votes, pardon, jobs to be saved. And with elections just 6 months ahead, is there any doubt what will happen?
More from the WSJ:
The proposals are the opening salvo in what is expected to be a long series of negotiations as pressure mounts on Congress to approve legislation to restructure the Postal Service, which has said it is in danger of becoming insolvent without changes to its business model.
The union’s plan is one of several competing proposals—including the Postal Service’s and bills in Congress—that are promoting rescue ideas, and it illustrates the deepening divide over how to remake the 236-year-old institution for modern times.
And the shocker:
Labor groups, for instance, generally oppose cuts to service. The mailing industry opposes higher postage fees. Many legislators say the Postal Service needs to close facilities—but not in their district. And a Republican-led bill set to be heard by the full House looks askance at any proposal that would allow the Postal Service to compete with private industry. That bill’s backers say the agency should act like a business—to a point. “Reducing excess capacity and adapting delivery to America’s changing use of mail is exactly what any business would do as technology changes the market,” said Ali Ahmad, a spokesman for the House Oversight and Government Reform Committee.
In other words, “fix it”, just don’t make me lose anything in the process… or work harder of course. In the meantime…
The Postal Service is facing historic losses—more than $5 billion in its most recent fiscal year—that it attributes to a shift in communication habits in the digital age and to an unusual requirement imposed by Congress in 2006 that it fund retiree benefits decades ahead.
Ironically Ron Bloom is spot on. It is unclear however, if his statement was tongue in cheek:
The union concedes that some “shrinkage” in the system is necessary, Mr. Bloom said, but he added that the Postal Service’s cuts will result in more revenue losses than savings.
He compared the Postal Service’s strategy to General Motors Co. before its restructuring. “Their strategy was to lose slowly, to shrink to survive,” he said.
Where Ron stopped short is that going from before to after restructuring involved billions in taxpayer cash. Yet unlike a just as bloated Chevy Volt post-reorg maker (not yet retrofitted with excess inventory Solyndra solar panels), at least the USPS can not stuff excess mail inventory in mail boxes. What it certainly can, however, is demand billions from taxpayers. Because, you know, if we just hope enough, things will change.