J. Scott Applewhite | AP
Postmaster
General Patrick Donahoe appears before the Senate Homeland Security and
Governmental Affairs Committee as the panel examines the economic
troubles of the Postal Service, a self-funded federal agency in decline
because of the Internet and advertising losses, on Capitol Hill in
Washington, Tuesday, Sept. 6, 2011.
WASHINGTON — Imagine a nation without the Postal Service.
No more birthday cards and bills or magazines and catalogs filling
the mailbox. It’s a worst-case scenario being painted for an
organization that lost $8.5 billion in 2010 and seems headed deeper into
the red this year.
“A lot of people would miss it,” says Tony Conway, a 34-year post
office veteran who now heads the Alliance of Nonprofit Mailers.
Businesses, too.
The letter carrier or clerk is the face of the mail. But hanging in
the balance is a $1.1 trillion mailing industry that employs more than 8
million people in direct mail, periodicals, catalogs, financial
services, charities and other businesses that depend on the post office.
Who would carry mail to the Hualapai Indian Reservation in the Grand
Canyon? To islands off the coast of Maine? To rural villages in Alaska?
Only the post office goes to those places and thousands of others in the
United States, and all for 44 cents. And it’s older than the United
States itself.
Ernest Burkes Sr. says his bills, magazines and diabetes
medication are mailed to his home in Canton, in northeast Ohio, and he
frequently visits the post office down the street to send first-class
mail, mostly documents for the tax service he runs. As his business
increased over the past three decades, so has the load of mail he sends,
and it’s still pretty steady.
“I don’t know what I’d do if they’d close down the post offices,”
said Burkes, who doesn’t use rival delivery services such as UPS or
FedEx. “They need to help them, just like they helped some of these
other places, automobiles and others.”
Postmaster General Patrick Donahoe is struggling to keep his
money-losing organization afloat as more and more people are ditching
mail in favor of the Internet, causing the lucrative first-class mail
flow to plummet.
Donahoe has a plan to turn things around, if he can get the attention of Congress and pass a series of hurdles, including union concerns.
“The Postal Service is not going out of business,” postal spokesman
David Partenheimer said. “We will continue to deliver the mail as we
have for more than 200 years. The postmaster general has developed a
plan that will return the Postal Service to financial stability. We
continue to do what we can on our own to achieve this plan and we need
Congress to do its part to get us there.”
He acknowledged that if Congress doesn’t act, the post office could
reach a point next summer where it doesn’t have the money to keep
operating.
That wouldn’t sit well with Mimi Raskin, a wine and antiques store
owner in Grants Pass, Ore., who likes her birthday card mailed. “If you
get a birthday card on the Internet, it’s like, well, I didn’t care
about you enough to go to a store, buy a card that suited your
personality, and mail it,” she said.
Donahoe and his predecessor, John Potter, have warned for years of
the problems and stressed that the post office will be unable to make a
mandated $5.5 billion payment due Sept. 30 to a fund for future medical
benefits for retirees.
A 90-day delay on the payment has been suggested, but postal
officials and others in the industry say a long-term solution is needed.
Donahoe has one. It includes laying off staff beyond the 110,000 cut
in the past four years, closing as many as 3,700 offices, eliminating
Saturday delivery and switching from the federal retirement plan to one
of its own.
Cliff Guffey, president of the American Postal Workers Union, called the proposal “outrageous, illegal and despicable.”
A contract signed in March protects many workers from layoffs. Guffey
said the attempt to change that now “is in utter disregard for the
legal requirement to bargain with the APWU in good faith.” Other unions,
including the National Association of Letter Carriers, are negotiating
their contracts with the post office.
Yet Donahoe’s efforts are drawing praise from people such as Conway,
the head of the nonprofit mailers, who says these are necessary steps
that officials have shied away from in the past.
Several bills proposing ways to fix the agency are circulating in Congress. One, by Rep. Darrell Issa, R-Calif., would impose a control board to make the tough decisions.
When it was first introduced, the bill was perceived as “way out
there,” Conway said. But as the postal financial problems have become
more obvious, “you’re seeing people thinking maybe it isn’t that
extreme.”
Gene Del Polito, of the trade group American Association for Postal
Commerce, said now that Donahoe has offered a plan, “why not give him
the authority do to do what needs to be done.” If that fails, then a
control board could be instituted, he said.
Closing offices seems an easy way to save, but members of Congress
never want cuts in their districts, and while the public may mail less,
people still want their local office to stay open.
The changes that Donahoe is proposing would mean a different post
office, but one that still operates for people such as Jovita Camesa,
who’s 75 and lives in a downtown Los Angeles retirement complex. She
said she’s sending more first-class mail than ever due to her expanding
circle of grandchildren.
Camesa said she wouldn’t think to use the Internet for those birthday
and holiday greetings, or start going online to seek out the articles
she now reads in the issues of Vogue, Readers Digest, Prevention and
other magazines that are delivered to her. “I’m not interested in the
Internet or computers,” she said. “I’m very traditional.”
Ellen Levine, editorial director of Hearst Magazines, told a Senate
hearing that the Internet has not eliminated the need for mail delivery
of magazines.
“Nearly all publishers use the United States Postal Service to
deliver their magazines to subscribers,” she said. “While most consumer
titles are also available on newsstands, mail subscriptions will remain
the major component of hard-copy magazine circulation in the United
States for the foreseeable future.” Overall, Levine said subscriptions
account for about 90 percent of magazine circulation.
Olive Ayhens, an artist who lives in Brooklyn, N.Y., says she pays
her bills online but still uses first-class mail. She was mailing
announcements of her newest gallery opening; one was going to her son in
London.
“Less than a dollar, I’m sending to London,” she said during a stop at the James A. Farley Post Office in Manhattan.
The Internet, along with the advent of online bill paying, has
contributed to a sharp decline in mail handled by the post office, from
207 billion in 2001 to 171 billion last year. Although the price of
stamps has increased from 34 cents to 44 cents over the same period, it
is not enough to cover the post office’s bills, in part because of
higher labor costs.
Yet one of the biggest problems isn’t mail flow or labor or other
costs. Rather, it’s a requirement imposed by Congress five years ago
that the post office set aside $55 billion in an account to cover future
medical costs for retirees. The idea was to put $5.5 billion a year
into the account for 10 years. That’s $5.5 billion the post office
doesn’t have.
No other government agency is required to make such a payment for
future medical benefits, so why not drop it for the post office.
Like everything in Washington, it’s not that simple.
The Postal Service is not included in the federal budget, but the Treasury Department account that receives that payment is.
That means that when the post office deposits that money, it counts
as income in the federal budget. So, if it doesn’t make the payment, the
federal budget deficit appears $5.5 billion bigger, something few
members of Congress are likely to favor.
In announcing his bill, Issa warned of a need to avoid a “bailout” of
the post office, which does not receive taxpayer money for its
operations.
Others, however, have characterized the $5.5 billion payments as a
post office bailout of the federal budget because it makes the deficit
appear smaller.
“We have made that argument,” said Del Polito. But it has been
rejected with the argument that the payments are required by law and
ending them requires a change in the law.
That problem of appearing to increase the federal deficit creates a
reluctance to deal with the matter directly, Del Polito said.
So where does that leave the post office and those Americans who don’t have access to the internet?
Sen. Joe Lieberman, I-Conn., suggested more people start sending passionate letters as a way to save the agency.
As good an idea as love missives may be, they are unlikely to be enough.
