At first glance, this article in The New York Times about the financial cliff facing the U.S. Postal Service seems to be just a sample of the news that has become all too familiar in 21st Century America: another government institution struggling with huge budget deficits.
But if we step back just a bit, there are a few features of this story that help clarify the outlines of the larger crisis facing the U.S. now.
The general theme of the article is that the U.S. Postal Service (again, like so many other problems portrayed in the State Run media) faces intractable, no, insurmountable problems: in a world of internet communications and direct purchasing and exchange, the USPS has seen a rapid decline in mail volume while it has been tied in to rising costs due, mainly, to hefty union contracts that cannot be modified.
The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.
The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.
As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.
At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.
So, at its most basic level, this story is reporting about yet another government agency that cannot live within its means and the unlikely prospect that the two parties in Congress can find any agreement to solve the problems. But the more troubling aspects of this story are not necessarily as evident.
First, consider the reporting of the story itself. For many Americans, The New York Times is still considered one of the premier news outlets in the country. Personally, considering the repeated and politically motivated inaccuracies often found there, I cannot understand why anyone gives the NYT any credence, but many still do, unfortunately. Yet this article– which is being put forward as a news report rather than opinion piece– fails to even note the most obvious and often-mentioned solution to the perpetual problems of the USPS: privatization and the break up its remaining monopoly on so-called “letter mail” delivery to receptacles marked, “U.S. Mail.”
In fact, there are many, astounding facts and figures omitted from the article and possible solutions. See the Cato Institutes site that fully discusses the problems and solutions of the USPS for comparison. For a major piece in a supposedly leading, American newspaper, it is woefully deficient in its scope and facts. Is the Times’ reporter simply ignorant of the wealth of information available on the subject or is he intentionally depriving readers in order to enhance the theme of hopelessness that pervades the piece? In either case, this incomplete reporting inevitably leads to last-minute, panicked decision making by political leaders, without adequate, public debate. And this myopic reporting happens all the time.
Second, this article points to a larger problem without really getting to the heart of it: the role of public employee unions. Whatever one may think of unions in private enterprise, the presence of unions in government agencies and other, publicly-funded work is always pernicious. In the private sector, a company is relatively free to reach an agreement with the union that can be sustained by the profits actually earned by the business. If labor costs reach an unsustainable level, the company can always resort to Chapter 11 to re-work labor agreements or, failing that, liquidate. Such is the price of unwise management.
For public entities, however, the unions are in the unique position of mobilizing their organizational power to elect politicians who will favor the union with ever-higher wages and benefits, regardless of the sustainability. In essence, public employee unions can install the “managers” who will decide compensation while passing along the burden of those decisions to taxpayers. Even the NYT article cannot hide the fact that the USPS’ financial problems are overwhelmingly caused by public employee unions that have extracted far higher costs for labor than those paid by competitors FedEx and U.P.S. Yet the article makes it clear that no politician, so far, is willing to take on the unions in order to get labor costs in line with the shrinking revenues.
Finally, the drift of the article is that the U.S. Government will be forced to bail out the USPS with emergency funding without finding any, effective solution to the underlying problems. This is the sort of thing that is simply killing this country. Everyone knows beyond a doubt that there is simply no money to bail out the Postal Service. The federal deficit for 2011 is veering toward $1.3 trillion, the third largest deficit in U.S. history according to the Congressional Budget Office. Nonetheless the NYT paints a picture of dire consequences if Congress does not bail out the USPS. What is the justification? Here is the perspective of one of the USPS labor union leaders:
Fredric V. Rolando, president of the National Association of Letter Carriers, warned of disaster if partisanship keeps Congress from acting.
“This is about one of America’s oldest institutions,” he said. “It survived the telegraph, it survived the telephone, and we have to do everything we can to preserve it and adapt.”
In the face of national bankruptcy, the U.S. Postal Service simply must be preserved. This attitude cannot continue. Everything must be preserved. Every program, every agency, every facility, every perk and benefit is sacred. Nothing can be cut or eliminated. The reality is simply not sinking in yet. Everyone wants to pretend that the fiscal problems can be solved by cutting someone else’s agency or program.
The prospects are frightening. If the 2012 elections do not produce a clear mandate for fundamental change in the nature and structure of the federal government– if the American electorate, in other words, opts for the status quo– then it is only a matter of time until a solution will be imposed. Perhaps that is economic collapse, worse than the Great Depression. Perhaps it is the rise of a Dictator who will use “emergency powers” to impose a decision. Perhaps it is secession. Perhaps it is a combination of them all. But it is clear that the so-called American Elite– the opinion leaders in the media and politics– are in denial and we have foolishly entrusted our Republic to them.