I’ve got a story up on the Web site about today’s marathon Postal Service hearing. It wasn’t very encouraging: As things stand now, the Postal Service faces a $6 billion deficit, and it will run out of money by year’s end.
There are some short-term fixes, like switching to 5-day delivery, or changing the way the Postal Service pays retiree health benefits. They’re detailed in my story. And they’re enough to “plug the gaps,” so to speak, and get the Postal Service through the recession. John Potter, the postmaster general, says he’s confident mail volume will pick up once the economy picks up.
But it seems there’s growing concern in Congress about the long-term health of the Postal Service â€” about what happens if mail volumes don’t rebound.
Here’s Del. Eleanor Holmes Norton:
The GAO said… you have made unprecedented cost cuts over the years… but it went on to say that USPS’s business model, and its ability to remain self-financing, may be in jeopardy.
And here’s Rep. Stephen Lynch:
Technology does not support that trend… people paying their bills online… do you think the facts support Mr. Potter’s assumption that things could get better on that end, that we can get this system back into viability on volume?
I think you have to take these concerns seriously. Mail volume and revenue have been dropping for years. More and more people just aren’t using the mail to pay bills or communicate with each other (“electronic diversion,” as the Postal Service calls it).
Yes, some of the Standard Mail volume â€” advertising mail â€” will rebound with the economy. But that’s not as profitable as First-Class Mail. And nobody’s sure how much of it will come back.
A lot of the Standard Mail growth over the past few years came from the financial and housing sectors â€” from the easy-money, credit-for-all attitude of the bubble years. I remember getting four or five credit card offers in the mail every week while I was in college. This was great for the Postal Service, I guess, but it made no sense for the banks, because I was making a couple hundred dollars a month at a campus work-study job. Not exactly a great credit risk.
We won’t see that level of financial mail volume again, at least not for a long time.
I’m rambling, but suffice it to say the Postal Service needs to think long-term strategy, not just short-term tactics. The GAO made the same point in its testimony today. They’re not worried about the Postal Service getting through the next few years. They’re worried about what happens after that.