Short-term fixes, long-term strategy

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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 — 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 — advertising mail — 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 — 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.

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  1. It’s AMAZING!!! We see that the Government cannot run the postal service or Amtrak. And the American people want them to run our health care? My god, it will be a disaster.

  2. The USPS was doing fine , until the economy collapsed. Most years they were in the black, even with paying those billions into future health care. Then came 4 dollar a gallon gas, bank failures, millions out of work, buisnesses not advertising. I would love to see the magician that could make a profit with these issues. Can we let the USPS fail?I do not believe the American public really wants that. Can you imagine what would happen if we shut them down for 1 week? There must be some changes i.e. closing some of the 30,000 plus smaller offices, 5 day delivery and others I do not know enough about to add to. I guess the main point is I think they are a victim of the economy, as opposed to gross mismanagement.

  3. Everyone has been talking about PMG Potter’s salary, the state of the economy, etc. One thing that has been getting very little press is the growing size of Potter’s executive board.
    People, Potter included, have compared his pay to that of other executives, like for Walmart, and the size of their board.
    The United States Postal Service is a very unique business, and should not be compared to other business in that fashion. Instead, look at the federal government itself. The United States, headed by the president, has a salary of only $400,000. His cabinet is only fifteen individuals, which includes the vice president. Compare the presidents cabinet of only fifteen to Potter’s “cabinet” of 43 (!) Senior and Executive Vice Presidents, all with very comfortable six-figure salaries. So, when Mr. Potter say “we need to cut back, cut back, cut back…, we need to cut back here, we need to cut bak there…”, I say, “Lead by example, and cut back on your own staff, and see how you can get along doing more of your own work yourself.” (Cutting his own executive staff by half, this alone will save the post office several million a year! What other wasteful spending is there???)

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