Editorial
NY Times--Saving the Post Office
  
Published: March 9, 2010

Many Americans rely on six-days-a-week mail delivery and expect to have a post office just around the corner.

But if the United States Postal Service is going to survive the transition to the Internet age—without requiring billions of dollars of federal subsidies—Congress must allow it to cut some services, close some offices and make other sensible changes.

Readers’ Comments
Since 1970, the Postal Service has been required to pay its own costs.

Still, Congress has insisted on the right to make many policy decisions.

The Postal Service made a profit until 2006.

Since then, declining mail volumes—as more Americans use e-mail and pay their bills online—and the demands of its retiree health benefit system have dragged it deeper and deeper into the red.

Last year, it delivered 17 percent fewer pieces of mail than in 2006 and reported losses of $1.4 billion, this year it expects to lose $7 billion.

Postmaster General John Potter warns that unless the service takes major steps to bring its costs into line, it will lose $238 billion over the next 10 years.

To avoid insolvency—or falling back into the taxpayers’ lap—he is asking Congress for the flexibility to implement an ambitious plan to reconfigure services and cut costs.

Not every idea is sound, and Congress should retain oversight to ensure that all Americans still have reliable mail delivery.

But Congress should grant the service most of the authority it requests.

Mr. Potter estimates that ending mail delivery on Saturday—when the volume is 17 percent lower than on weekdays—would save $40 billion over the next decade.

He wants to close some yet-to-be-announced number of post offices and replace them with cheaper alternatives, such as automated kiosks and postal windows at supermarkets and other retailers.

He is also asking for more flexibility to raise the rates of some services to meet changes in demand and costs.

These seem reasonable compromises considering the magnitude of the challenge.

They have to be done the right way.

Post offices should not be closed in rural areas and other hard-to-reach places that do not have alternatives.

The Postal Service also must work with other government agencies to ensure that people who receive crucial mail—such as Social Security checks—on Saturday, receive it on Friday rather than on Monday.

The service says these proposed changes, dramatic as they are, would still fill only part of the gap.

Mr. Potter believes it can find other savings and new profits by expanding product offerings—like new direct-mail products for small businesses—and cutting labor costs, including by hiring more part-time workers and reducing full-time employees through attrition.

Some 300,000 postal workers are expected to retire over the next decade—about half the Postal Service’s entire staff.

Some of the proposed changes are flawed.

Mr. Potter is hoping to save another $50 billion over the next decade by stopping contributions to a fund to pay for future retiree health benefits, covering them instead on a pay-as-you-go basis.

As many workers have discovered, unfinanced promises of future benefits have a troubling tendency to become worthless in times of economic stress.

Still, the service might be allowed to reduce its annual contribution.

Right now, by law, it has to make contributions consistent with a 7 percent annual rate of inflation for health care costs, while Medicare uses a rate of 5 percent to 6 percent to project future benefits.

Even with the Internet, Americans will need mail services for packages, legal documents and, yes, letters for years to come.

In some areas of the country, the Postal Service is the only service available.

And all Americans should not have to rely solely on private businesses for anything as fundamental as mail delivery.

That means that Congress has a straightforward choice: It can give the Postal Service some more flexibility to run like a business.

Or it can start subsidizing it to the tune of $10 billion-plus a year. We vote for flexibility.