by Akim Reinhardt
Earlier this week, the United States Post Office announced that come August, it would be suspending regular home delivery service of the mails on Saturdays, except for package service. The USPS is In financial straits, and the budget-cutting move will save about $2 Billion in its first year, putting a dent in the $16 Billion it lost just in 2012.
The Post Office has come under financial pressure from a number of sources over the past decade. Of course the internet has usurped traffic. And there’s also lost market share to private carriers like Federal Express and United Parcel Service, which cut into the lucrative package an overnight delivery markets, while leaving the USPS with an unenviable monopoly in the money-losing but vitally important national letter-and-stamp service. Despite regularly increasing rates over the last decade, the United States still offers one of the cheapest such services in the world, with a flat fee of 46 cents to send a 1 oz. envelope 1st class anywhere in the United States.
For less than half a dollar, you can send a birthday card from Maine to Hawai’i, and be confident that it will arrive in 2-3 days. Pretty impressive. Especially when compared to other nations, almost all of which charge more for an ounce of domestic mail, even though most of them are quite a bit smaller in size. The chart below compares rates from 2011.
Another financial constraint comes from the fact that, other than some small subsidies for overseas U.S. electoral ballots, the USPS is a government agency that pays its own way, operating without any taxpayer dollars for about thirty years now..
However, the biggest factor in its recent financial free fall is undoubtedly the Postal Accountability and Enhancement Act of 2006 (PAEA), which Republicans pushed through Congress and President George W. Bush signed into law. The PAEA required the Post Office fully fund its pension healthcare costs through the year 2081.
Yes, you read that right. 2081. And it was given only 10 years to find the money to fund 75 years worth of retirement healthcare benefits.