Recent Weekly Columns
Aug 22 2002
Felicia KnightThe United States Postal Service is facing a crisis. It continues to run deficits, shoulders billions in debt, and is losing customers due to increased costs for services and greater use of electronic technology. The need to preserve a viable Postal Service is clear. Americans count on reliable, affordable, and universal mail service as their primary means of communication.
Losses for the Postal Service are projected to be $1.35 billion this year. It is mandated by law to break even, but it simply is not generating sufficient revenues to cover its operating expenses and its capital needs, both of which continue to grow.
That is why I have introduced the “United States Postal Service Commission Act of 2002.” It would establish an eleven-member Presidential Commission to examine the challenges facing the Postal Service and to develop solutions to ensure its long term viability and increased efficiency.
There are many factors that play into the Postal Service’s financial difficulties. The overall growth rate of mail has been declining since 1997, and first class mail volumes, which currently makes up over 48 percent of the total amount of mail and funds a substantial amount of institutional costs, is also declining.
Some of the decline is attributed to increasing forms of electronic communication. Electronic bill payment is quickly becoming a major means of doing business. It is estimated that 75 percent of banks will provide online banking services by 2003. Additionally, there are other competing forms of communication such as faxes and telephones.
The Postal Service is also fast approaching its $15 billion statutory borrowing limit. Given its recent history of increasing rather than paying down its debt, raising the Postal Service’s debt ceiling is not the answer. The Postal Service’s long term liabilities are enormous — to the tune of nearly $6 billion for Workers’ Compensation claims, a staggering $32 billion in retirement costs and perhaps as much as $45 billion to cover retiree health care costs. Meanwhile, on June 30, consumers experienced a third postal rate increase in just 18 months.
In states with large rural areas, such as Maine, it is vital that the Postal Service remains in place. If the Postal Service could no longer meet its obligation to provide universal service and deliver mail to every customer, six days a week, that affordable communication link upon which many Americans rely would be jeopardized. Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to rural areas at rates that the Postal Service has been offering.
Not only are residential consumers affected, but so are the state’s businesses. I have met with many Maine businessmen and women involved in the catalog, printing, and other businesses who have described to me the negative impact of rising postal rates on their profitability. I know there are millions more across the country that are grappling with the same detrimental effects of rapidly rising postage costs.
In addition to providing a critical service to residential and business consumers, the Postal Service is the eleventh largest enterprise in the nation with $66 billion in annual revenue. This is more than Microsoft, McDonald’s and Coca Cola combined. While the Postal Service itself employs more than 700,000 career employees, it is also the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing and paper production. The Postal Service has successfully overcome numerous difficulties over its 226-year history, and has continued to deliver the mail faithfully. Yet it has reached a critical juncture, and once again, it is time for a thorough evaluation of the Postal Service’s operations and requirements. We need to ensure that the Postal Service will stand up to the challenges of the 21st Century.