

USPS sees $8.5 billion loss, warns Congress it'll be broke by 2011 - percept
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR2010111205939.html

======
bluedevil2k
If you think about the USPS as an independent corporation, it would be crazy
to think about these results: a government approved monopoly, massive tax-
shields (no business income tax, no property tax on post offices). Then, you
contrast that with their one big weakness - they can't set their own prices.
Congress sets the postage rates. Talk about an incredibly inefficient way to
run a business - seems a great counterpoint to anyone who thinks government
should be more involved with business.

Here's a quick and drastic solution to the USPS problem. 1) Give them the
ability to set their own prices. They have competition in the form of UPS and
FedEx for large packages delivered to your door. Chances are those prices
wouldn't change. The rate for a stamp would potentially double. Is that a bad
thing? Seriously, what percentage of the stuff you get in the mail is actually
useful? 10%? 5%? Yes, there are some businesses who depend on cheap mail, but
in effect the US taxpayer is subsidizing their business then. It's no
different than the US bailing out the car companies in that regard. This price
increase would probably decrease mail volume considerably. 2) Reduce delivery
to 3 days a week. Would anyone complain about this? How many people even check
their mail every single day without fail? Again, this may hurt mail-based
businesses, but they are already existing in an artificial business
environment skewed by government subsidies. Going from 6 days to 3 wouldn't
cut costs 50%, but I think 20-25% cut in costs is reasonable to expect,
considering the volume decrease.

These two things would quickly make the USPS profitable. As everyone here has
pointed out, it's not 1980 any more. There's better way to transmit
information from one person to another.

~~~
rwl
"If you think about the USPS as an independent corporation, it would be crazy
to think about these results..."

I agree. But why should we think of it that way?

The Postal Service was originally conceived as an essential piece of national
infrastructure. Why should we think of it as an "independent" entity that
needs to turn a profit? Does the highway system turn a profit? How about the
Federal Reserve, or the National Institutes of Health?

What's important is that the USPS continue to have enough funding to provide
its service in an accessible, timely, and reliable manner. That is what makes
it a critical piece of infrastructure. Like it or not, it is still essential
to be able to communicate with hard copies.

(Why? For one thing, we don't, as citizens, all have an official electronic
mail box. Physical mail also bears information about its transport -- where it
went, whether anyone else read it along the way, whether it was delivered and
read -- in a way that most electronic communication doesn't. We don't have a
unified way of finding out how to communicate with someone online, and the
means we do have are all owned by private corporations that cannot be relied
on to provide that information in perpetuity. And so on.)

I agree that, for many things, there are ways to communicate that have
advantages the Postal Service doesn't offer. But I cannot imagine having to
sacrifice what makes that service valuable in the name of making it
profitable, or always having to rely on alternative services, especially for
critical or official communication. We're going to need a public post office
for some time yet. And as communication continues to move online, the need for
a reliable, public system for delivering that communication will grow even
further.

~~~
kbutler
Does the Federal Reserve turn a profit?

Yes.

$45 billion in 2009: [http://www.washingtonpost.com/wp-
dyn/content/article/2010/01...](http://www.washingtonpost.com/wp-
dyn/content/article/2010/01/11/AR2010011103892.html)

Earnings beyond the cost of operations are returned to the US Treasury:

<http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#6>

kb

~~~
rwl
This is interesting -- I didn't know the Federal Reserve was allowed to turn a
profit. I guess it makes sense, though. My instinct is: well, that's great!
(Proof that a government entity _can_ be run profitably!) But even if it
couldn't make a profit, that wouldn't be an argument for not having a central
bank, or for making drastic cuts to its operations in order to make it
profitable. The point is that we have these institutions because we need them
to serve a certain function, whether or not they can do so profitably.

~~~
noelchurchill
The Fed is not a government entity. It's a private for profit company.

~~~
anonymous246
Somebody downvoted you instead of replying. I upvoted, but looks like the
Stackoverflow-like algo pg has didn't count my vote. Or the person who
downvoted you has a posse.

Anyway, here's a web page with an extract from the US federal court:
<http://www.healthfreedom.info/Federal_Reserve_Fraud.htm>

"Examining the organization and function of the Federal Reserve Banks, and
applying the relevant factors, we conclude that the Reserve Banks are not
federal instrumentalities for purposes of the FTCA, but are independent,
privately-owned and locally controlled corporations." [Lewis vs. U.S., 680 F.
2d 1239, 1241]"

See also: [http://seekingalpha.com/article/125092-grand-illusion-the-
fe...](http://seekingalpha.com/article/125092-grand-illusion-the-federal-
reserve-part-1)

------
waterlesscloud
Raise the rates on bulk mail. There's so much of it that it's clearly priced
too low.

~~~
eli
I was under the impression that bulk rates subsidize artificially low first
class rates.

~~~
glhaynes
So let's let them subsidize first class rates further!

------
ck2
I've read that many employees retire early with full benefits and then get
their buddies to hire them back as contractors for even higher pay while
getting benefits. Your delivery person may be making over $100k with full
benefits.

Their executives are even more corrupt:

[http://www.washingtonpost.com/wp-
dyn/content/article/2010/09...](http://www.washingtonpost.com/wp-
dyn/content/article/2010/09/26/AR2010092603359.html)

[http://www.washingtontimes.com/news/2009/feb/17/in-hard-
time...](http://www.washingtontimes.com/news/2009/feb/17/in-hard-times-
postmaster-earned-800000-in-pay-perk/)

Maybe they need an "auto-industry" style reset.

(and bulk rate definitely needs a 50% increase)

------
tumult
There is a man whose job is to each day enter my property and deposit garbage
into a receptacle, which I am then legally obliged to dispose of.

He is the mail man.

~~~
jacoblyles
I contend that the USPS is the world's largest legal spam operation.

~~~
simonsarris
I don't see why its okay to be so derisive of the USPS. By your token, http is
the internet's largest spam operation

~~~
jacoblyles
Difference is, what percent of revenue for the internet comes from spam? Spam
is the USPS's bread and butter.

I receive mail from the USPS every day. Only about 10 times per year is there
something relevant to my interests.

------
grandalf
I get such little useful content from my mailbox that I only empty it when
it's become completely full (about once every 10 days).

I'd be totally happy with weekly mail delivery, which would cut costs
substantially.

Most of what is in the box is direct mail advertising that I've tried very
hard to opt out of and which goes directly into the garbage. What remains is
duplicate copies of bills I get online and tons of junk from Wells Fargo, etc.

I think the USPS has become more of an advertising distribution service than
something of value to the typical person.

And, USPS doesn't attempt repeated delivery of parcels, so 80% of the time I'm
not home to receive it and have to drive to the post office and stand in line
to collect it.

Daily mail delivery would make sense if you could count on things being
delivered with day level precision, but in my experience all mail that isn't
coming from the same city or adjacent cities is wildly unpredictable.

~~~
ams6110
I process my paper mail once a month, when I pay bills. I do empty the box
more often than that but I just put it in a pile, discarding obvious junk
immediately but opening nothing. I find this to be the most efficient
approach.

~~~
grandalf
That's my approach too. Most of it never gets opened, but once in a while I'm
fooled by an official looking envelope.

------
muerdeme
I suspect the board of governors got sick of dealing with the escalating costs
of labor (fixed in arbitration with unions) and had to figure out a way to
really get Congress' attention once and for all. They are warning about
impending bankruptcy without even trying some of the drastic measures they had
toyed with, i.e. no Saturday delivery. Those measures only would have delayed
the inevitable, but this still smells to me like the leaders are sick of
Congress passing the buck.

~~~
cosmicray
If the USPS dropped Saturday, it will have little effect on the back office
side of business. Pretty much the mail volume will remain unchanged. The same
number of printed bills will be handled, the same number of greeting cards,
the same number of standard mail (what used to be called 3rd class or
bulk/junk), and pretty much the same number of packages.

Due to the human interface issues, USPS will still have to maintain some
semblance of Saturday retail window hours. In the small town where I live,
retail hours have already been trimmed somewhat.

Removing Saturday delivery will save in manpower, and reimbursements for
milage. To the best of my knowledge, rural carriers only work 5 days a week.
So the 6th day (regardless of which day it is) is filled in via a substitute
carrier. Those subs could see a drastic drop in hours of work.

But back to my original comment about back office operations... If you dumped
Saturday, all the mail that would have been sorted on Saturday morning, will
still be sitting there on Monday morning, waiting to be handled.

There may be savings here, but don't expect it to remove 1/6th the operating
costs of the USPS.

~~~
HectorRamos
USPS works 24/7 actually (my girlfriend works in one of their regional sorting
facilities).

Mail is sorted throughout the whole week, if anything we might see less hours
being worked by the sorters on Thursday and Friday when the Saturday
deliveries are sorted out.

Keep in mind only Saturday delivery is being suggested to be dropped out,
that's the end-of-the-line. You still have to sort at all kinds of upper
levels (does this piece go to a zipcode within this state, or one of our
territories, USVI, etc? And so on, until they get to the local USPS PO, which
is the one which would handle the local Saturday delivery).

(Not that this disputes anything you said, just pointing out that mail will
probably still be sorted the same way its being done right now)

------
tocomment
Start delivering mail only two or three days a week. That's all anyone reall
needs. If nothing else cut out Satirday at least. And charge whatever you need
to. It's not like mail is some kind of necisoty that needs to be kept cheap.

Sent from first generation iPhone sorry for the typos.

~~~
racecar789
Mail needs to be delivered daily (preferably seven days a week). Economic
transaction efficiency depends on the mail. Many invoices, payments, legal
documents etc are still sent through the mail (even though they should be
electronic).

~~~
X-Istence
The banks don't process any of my payments on the weekends, so bills and
invoices don't matter if they arrive on the weekends.

Saturday and Sunday thus are not required.

As for legal documents, those are all based on the standard work week as well,
so that argument falls as well.

As such there is no reason for mail to be delivered on Saturday or Sunday. At
the company I work at we get mail on Saturday, we don't get to read it until
Monday anyway.

~~~
webgambit
> As for legal documents, those are all based on the standard work week as
> well, so that argument falls as well.

No, it doesn't. Quite a few legal documents are signed on Saturdays and then
overnighted back so that the sender can have it back by Monday.

------
rick888
wow, a government run program out of money? What a surprise (:-O <= this is my
shocked face). The problem is that they aren't running it like a corporation,
because they feel they have a monopoly.

As an example, a few summers ago, the USPS internet gateway went down. It took
them over a month to get it back up and running properly. For over a month,
anyone running a website could not get correct rates (If it could connect to
the servers at all).

If this was a private company, they would have lost a ton of customers.

------
chrisbennet
I think the USPS is importance lies in that they serve a section of the market
that wouldn't be served otherwise.

Their charter probably requires that they deliver mail to rural areas i.e.
unprofitable ones.

If you _really_ wanted them to be competitive you would allow them to ditch
their "unprofitable" routes (sorry Alaska) and fund their retirements like
Fedex and UPS.

As an aside, it does seem that they are "ad supported" to a certain extent.

------
jared314
Earth Class Mail had a good idea. Why not imitate that?

------
jwhitlark
Years ago, the USPS proposed to give everyone that had an address an email
account, for receipt and payment of bills. Then they priced it at the cost of
two first class stamps. The program died, and we lost what might have been a
vaulable piece of new infrastructure.

~~~
iamgoat
Time to retry this program. Every year that passes is a better opportunity for
the postal service. More people are online and many businesses have paperless
statement options. Less important letter mail is being delivered.

I would pay not to have to check my physical mailbox but once a month.

Next up, get rid of yellow pages.

------
utefan001
My friend who is a USPS contractor says management wants to cut costs by
eliminating Saturday delivery, but the politicians don't have the balls to
approve it. They are only worried about getting re-elected.

------
util
Does the dip in NFLX around noon EST correspond to this?
[http://www.google.com/finance?client=ob&q=NASDAQ:NFLX](http://www.google.com/finance?client=ob&q=NASDAQ:NFLX)

------
drallison
A modest proposal: perhaps the USPS should reassert the constitutional postal
monopoly and recover the highly profitable urgent letter and package business
from FedEx and UPS.

~~~
mindcrime
A less modest, but more practical proposal: remove the USPS's monopoly
protection and make it compete on the market alongside private carriers. Let
the best business(es) win.

~~~
drallison
What do you believe would happen it FedEx and UPS (and who ever else wanted)
needed to provide regular first class mail delivery and other letter services
to every postal address in the United States for, say, $0.44/ounce in return
for a license to deliver urgent mail and packages?

------
brianobush
considering I haven't checked my (physical) mailbox for two days now, I wonder
the effectiveness and necessity of the service. I know many people that do
depend on their services, but I think the USPS will become a thing of the past
eventually.

------
mkramlich
solution: some permutation of raising prices or reducing costs. next story :)

------
fleitz
"Congress has an obligation to ensure that effective solutions are implemented
and taxpayers don't get stuck paying for a bailout," I wonder where Issa was
when bailing out the banks for $2 trillion.

~~~
jeromec
The bank bailouts appear to be widely unpopular. I can only guess this is
because people don't truly grasp what was happening, or what the alternative
would have been. My congressman was one who initially voted against TARP, and
I communicated to him that he needed to change his vote. Like most politicians
he is not an expert in economics or finance, and he didn't take kindly to what
was essentially the Bush administration "telling us the sky was falling, and
putting a gun to our heads." But the sky _was_ falling. The economy was in a
free fall with millions of jobs being lost monthly, the stock market tanking,
and credit markets -- a crucial cog in our economy -- freezing up. If congress
had not acted the financial system would have collapsed. We would now be in a
real depression. Imagine how bad people say the economy is now, and multiply
that by about 100. I'm talking millions unemployed, homeless, tent cities,
crime, and a feeling of hopelessness pretty much everywhere. _That_ would have
been the alternative to not bailing out the banks. In that context I don't
think many would oppose the bailouts.

Now, was the system set up incorrectly where we could end up in such a mess?
Yes. But that wasn't the fault of any one politician or group of politicians
at any one time. The problems leading up to the crisis built up in different
ways over time. The financial reform President Obama has pushed through
addresses some of these issues, for example, by allowing the government the
power to break apart and unwind large "too big to fail" type entities without
bailing them out with taxpayer funds. When you look at it this way, Congress
and both the outgoing and incoming administrations did do what was best for
the country, even if unpopular on the surface. This doesn't even get into the
fact that a lot of that initial money has been, and continues to be paid back,
and in some cases even turns a profit.

~~~
jonpaul
I think there's a bit of FUD in your statements. I also believe that those who
supported the bailout are the same who stood to lose the most i.e. the
wealthy. I believe that the bailouts will only further encourage the same
behavior and prolong the inevitable.

~~~
evgen
If the worst-case, or even most-likely scenarios had llayed out then the
wealthy would have lost a lot and the poor and middle-class would have lost
_everything_.

------
phillijw
USPS has become irrelevant

~~~
glhaynes
My immediate gut-reaction toward this kind of statement is negative: do we
really want to have private companies in charge of _all_ mail in the US? And
no doubt there are some people who rely on it and wouldn't get acceptable
service (due to remoteness, etc) from a private company. Etc.

BUT: the _vast_ majority of the mail _I_ get through the postal service is
junk mail that I don't want. The remainder is almost entirely stuff that I'd
prefer to get electronically and, if the USPS were to disappear, I feel
confident I would.

So I'd like to hear arguments for the continuing subsidy and existence of the
USPS, but I wouldn't personally cry any tears if it were abolished tomorrow.

~~~
woodrow
USPS provides first class mail service to all Americans for the same cost
(whether that letter is addressed to down the street or across the country)
and provides mail service to almost everywhere people live in the United
States, whether it be a small rural town or New York City.

So in part, it's a matter of equity -- that everyone in this country has equal
access to postal services and the benefits they provide (which are admittedly
cross-subsidized). This same rationale goes into telephone universal service
funds and has been discussed in the context of the national broadband plan
too.

None of the USPS' private competitors do (or I can imagine would do) this.

~~~
glhaynes
Indeed. I imagine that if the USPS were to be dissolved, there would need to
be federal regulations put on their private competitors requiring universal
service with low-cost options, much as there are in telecom. (And that the
general public would strongly support such regulations _not_ covering "junk
mail".) I wonder whether FedEx/UPS/et al would be interested in such a system
or not.

