The U.S. Postal Service (USPS) is a branch of the federal government headed by a Postmaster General and a Board of Governors with further oversight provided by the Postal Regulatory Commission. However, ultimate authority over the USPS rests with Congress. The USPS is structured like a business in that revenues from the sale of postal products generally cover costs, and it receives virtually no federal appropriations. The organization is the second-largest civilian employer in the United States—after Wal-Mart—with about 600,000 workers. If the USPS was a private company, it would rank about 28th on the Fortune 500 list of largest companies.
While the USPS is structured like a business, Congress often prevents it from actually operating like a private company, such as taking actions to reduce costs, improve efficiency, or innovate in other ways. The agency is also obligated by statute to provide mail services to all Americans, irrespective of where they live and the cost of serving them. It is required to deliver first-class mail at a uniform price throughout the nation.
Is it any wonder why the USPS is in debt? The USPS fiscal year 2011 debt was $13 billion and in the first quarter of fiscal year 2012; it had a $3.3 billion operational loss. The USPS can borrow money from the U.S. Treasury but its debt limit is set at $15 billion by federal statute. Thus, the USPS will no longer be able to absorb operational losses by the end of this year.
The USPS is losing billions of dollars annually because of declining mail volume and increasing labor costs. According to a U.S. Government Accountability Office (GAO) report
Part of the problem is that lawmakers continue to micromanage its practices. (We know how Congressional micromanagement has worked with regard to our economy.) For example, Congress has repeatedly prohibited requests to eliminate costly Saturday mail deliveries and reduce the number of post offices. Congress and the Obama administration need to empower the USPS to operate more like a business by giving USPS management more control over decisions about its financial well-being.
Congress should consider privatizing USPS. Congress can learn from other countries where the private sector has taken large ownership stakes in their postal services. For example, 69 percent of Germany’s formerly government post office Deutsche Post is now privately owned, deliverying 70 million letters in Germany, six days a week and doing it at a profit. Through its DHL International arm -- purchased in 2002 -- Deutsche Post AG also operates express service in about 170 countries. In the Netherlands, 100 percent of its formerly government post office is privately owned as TNT Post. The British government is considering selling off to private investors its ownership of the Royal Mail where at least 10 percent of the shares may be reserved for postal employees, which would have the benefit of reducing the unions’ incentive to take actions negatively affecting the company’s bottom line.
Unfortunately, Congress is again going the reform route to shore up the faltering USPS. S. 1789, the "21st Century Postal Service Act," also known as the "Postal Reform Bill"
S-1789 would postpone ending Saturday delivery service for two years, while S-1853 would delay it for four years. S-1789 would also use $11 billion in overpayments to a retirement fund to provide incentives to long-time postal workers to retire, and would allow the USPS to offer additional services, such as the sale of fishing licenses and the shipping of beer and wine. S-1853 goes further by preventing the enactment of proposals suggested by Postmaster General Patrick Donahoe, such as closing post offices and processing centers and slowing first-class mail delivery times. The USPS has agreed to delay closing any facilities until May 15 to allow Congress to act.
According to a MapLight analysis
On the other hand, MapLight analyzed
With privatization, Congress would end its micromanagement of the USPS; eliminate the complex laws and regulations on delivery schedules, price caps, restrictions on facility shut-downs; and other business decisions. Unfortunately, Congress will again attempt reform, rather than consider privatization.