If Congress Can't Fix the Postal Service, It Can't Fix Anything

Rick Newman

Most Americans know that the U.S. Postal Service is a mess. What they also ought to know is that Congress is largely responsible for this once-competent institution's bad rap.

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This is the same Congress that is going to have to bring Medicare back from the brink of insolvency, find a way to fund Social Security as it becomes top-heavy with retired baby boomers, and pay down trillions in federal debt without short-circuiting the whole economy. Compared with all that, fixing the Postal Service is easy. Yet Congress dithers, cultivates decline and allows festering problems to become worse.

The Postal Service has been making headlines again because it just defaulted on a $5.5 billion payment due to the U.S. Treasury to fund healthcare costs for future retirees. Another such default is likely at the end of September. The details are technical and boring, and for now, the mail will still show up in the mailbox. So the members of Congress perpetrating the default--mostly House Republicans--act like it's no big deal.

But it is a big deal because the recalcitrance of political leaders shows an alarming willingness to dismantle the basic machinery of the economy. The Postal Service isn't some dispensable outpost doing research on cow pies or freshmen mating habits. It's an elemental part of the government that has been around since before the Constitution. Benjamin Franklin, the seminal American, was the first Postmaster General. He'd gag at today's handling of the Postal Service.

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Here's the basic background: In 1971, Congress reorganized the USPS as an independent agency that's supposed to pay for its operations through stamp sales and other forms of revenue, like a normal company. But the catch is that Congress still holds sway over strategic decisions, and most Postal Service employees are treated as members of the federal workforce. So at best, the Postal Service is a hybrid organization that's as vulnerable as ever to political meddling.

That's what is holding up reform plans now. The Postal Service itself has detailed a plan to eliminate Saturday delivery, consolidate processing centers, close underperforming post offices and make other cuts to adapt to a technology-driven economy that is obviously less dependent on physical mail delivery than in the past. Hundreds of regular companies have changed their business models and made similar adjustments to survive. Those that didn't--Eastman Kodak, Borders, Lehman Brothers--paid a brutal price.

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The Senate has even passed a bill that would fix some of the Postal Service's problems and buy time to sort out others. That brings us to the House, where sensible legislation goes to die. There is a House bill meant to fix the Postal Service, but House leaders won't bring it up for a vote. Nor will they vote on the Senate bill. House leaders like Speaker John Boehner and Majority Leader Eric Cantor won't say why, exactly.

Most likely, there's not enough support in the House to pass any bill, so holding a vote would be an embarrassing setback for the GOP leadership. Opposition to reform seems to come from some usual suspects, such as rural lawmakers who don't want postal facilities in their districts closed. Others (including Republicans) object to provisions that would allow the Postal Service more freedom to lay off unionized postal workers. Then there are Tea Party types who would prefer to privatize the agency, or who seemingly want to starve it of cash, so that ... well, it's not clear what purpose that would serve. What makes this standoff infuriating is that there are plenty of proposed solutions, including studies by at least three well-known consulting firms that execute corporate turnarounds for a living. There's no need for further analysis, there's only a need to make a decision and do something.

But the problem can be put off for a little longer, even if that makes the ultimate solution more expensive and encourages big mailers like Amazon and other retailers to look for other delivery choices. So Congress does less than the bare minimum and the Postal Service drifts toward ruination. Maybe the House will get to it in the fall, after their customary six-week August vacation. Maybe next spring. Maybe never, in order to show those impudent postal employees and their arrogant customers who's really in charge around here.

Meanwhile, at the end of this year, Congress needs to come up with a deft way to forestall billions in tax hikes and spending cuts that will induce another recession if allowed to fully go into effect. By early next year, it will have to come up with a way to extend the government's borrowing limit while also weaning Washington off its desperate borrowing habit. Then come some huge decisions about how to reform Medicare, Medicaid, Social Security and the long-term defense budget. If the handling of the Postal Service is any indication, we all ought to be terrified.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.