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Don’t Privatize The Postal Service.
Build On It.

| March 7, 2015

Privatize this?

Privatize this?

By Katherine McFate

Did you know that when you ship a package through Federal Express, the U.S. Postal Service often carries it the last mile?


Last year, the Postal Service delivered 1.4 billion packages for FedEx and UPS. In fact, it delivers the last mile for almost a third of FedEx packages. The 618,000 Postal Service workers also delivered nearly 66 billion pieces of first-class mail — that’s more than 100,000 pieces per carrier.

The Postal Service can reach all 150 million American households because it’s a publicsystem that we’ve been investing in for over 200 years. Our Constitution tasked the federal government with creating a national postal system and told the Postmaster General to report to the president.

But in 1971, Congress made the service into an “independent agency” managed by a board of governors. And since then, it’s been under attack by politicians who never met a public program they liked.

Yes, the rise of UPS, FedEx, and the Internet has created new challenges for your local post office. But the purported “fiscal crisis” is a manufactured one.

In 2006, Congress required the Postal Service — known as USPS for short — to “pre-fund” 75 years of its retirees’ health benefits. This added $5.7 billion to its costs last year.

No other private company or federal agency has to pre-fund retirement health care benefits. If they did, many corporations would run huge deficits or tumble into bankruptcy. Without these retiree health payments, USPS would actually turn a profit.


Congress’ demand that the USPS “pre-fund” 75 years of retirement benefits is a bogus source of deficit few private companies’ ledgers would survive.


Using the deficit created by this requirement as an excuse, the USPS board of governors is closing distribution centers, cutting worker hours, eliminating delivery routes, and slashing jobs. Over the past five years, USPS has cut 94,000 positions.

The job loss alone is a travesty, but a bigger principle is at stake.

Our nation’s founders understood that a universal, affordable, and yes, public postal system helps knit us together as a nation. They recognized that commerce requires a common infrastructure and public institutions that belong to and benefit the entire country.

Instead of shrinking the Postal Service, we should build on it. That means, first of all, appreciating that the USPS can be much more than a delivery service.

In many small towns, the local post office continues to be a community hub, a place to meet neighbors and get news. And postal carriers don’t just deliver letters — they often keep an eye on the elderly and homebound, and alert first responders if things look amiss.

They could do even more. The Postal Service’s fleet of vehicles — the largest in the country — could be equipped to detect air pollutants and report potholes, water leaks, and other infrastructure repair needs.

Why stop there?

other-wordsThe USPS could raise tens of billions of dollars each year by reinstating post office savings accounts and banking services, which it efficiently provided for 55 years in the first half of the 20th century.

Customers received 2-percent interest on their savings accounts, and the post office loaned their money to community banks, which then made loans to local businesses. This virtuous circle benefitted the entire community. At its peak, 4 million Americans took advantage of these services, saving $36 billion in 2014 dollars.

Today, 34 million American families live in places without traditional banking services. High-interest payday lenders and check-cashing services charge low-wage working families in those communities an average of over $2,400 a year. Experts estimate that low-cost banking services could save American workers a trillion dollars a year.

Instead of selling off the assets we built together over two centuries, let’s invest in our Postal Service — a public system that has served our nation since its birth.

Katherine McFate is the President and CEO of the Center for Effective Government in Washington, D.C.

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7 Responses for “Don’t Privatize The Postal Service.
Build On It.”

  1. BIG JOHN says:

    A beautiful, well-written essay that succinctly points out the need for the restoration and expansion of one of our nation’s most essential infrastructure assets.
    The average letter carrier in a big city delivers between two and three thousand pieces of mail every day, six days a week. That’s well over the 100,000 you mentioned. Not all of the 618,000 employees are letter carriers. That’s probably where you made your miscalculation.

  2. confidential says:

    You forgot to mention that a GOP Congress made that demand of 75 years ahead of time contribution to their retirement plans. Always trying to privatize it all specially our government programs or its agencies or dependencies. A real travesty. Gets your paws off our Postal Service they have been servicing us very well since founded replacing our pioneer Pony Express. GOP Congress needs to stop disintegrating the very fabric of America!

  3. Lancer says:

    Here we go…again: “The GOP is the boogie man through which all bad things flow!”. Those vilifying one particular party for the down fall of the USPS are back.ward thinkers and have fallen victim to the failed experiment of big government

    The postal service has a monopoly on 1st and 3rd class mail. The postal service, at its start, was a needed entity. There had to be a secure and consistent way to deliver mail, parcels, etc. to people. The sheer capital needed to start a private venture of this kind, originally, made this a know brainer.

    Then, technology happened. UPS and FedEx, for starters, revolutionized the industry with more efficient and consistent delivery methods. They even were able to expand internationally. USPS has had trouble keeping up with the competition.

    Then, the internet happened. Suddenly, emails could be sent instead of letters. You could correspond more quickly, almost immediately with family, friends, co-workers, etc. Technology has made the USPS less desirable.

    Next came the smart phone. Now text messages, emails and phone calls could be made and get even quicker responses.

    Technology has made the postal service, virtually, a non-entity. It isn’t a bad thing…it means we are advancing as a society. There may, indeed, be a role in USPS’ future, but that role needs to be defined. One thing is certain…that role is NOT worth the billions of taxpayer dollars it is allotted.

    The problem that we have is the current and retired USPS employees getting those sweetheart, life long benefits. They are expensive, however, those promises should be kept.

    The USPS needs a serious overall and, if need be, cut to the least amount possible. If there is a serious call…it needs to be eliminated entirely.

    Only in government lover la la land should something be kept “just because”. When the automobile was created, smithies all over the country lost their jobs as horse transportation became a way of the past. Labor was freed up, resources were re-directed….automobiles needed mechanics, we needed better local roads, we needed fuel…the economy and market shifted for the better…and we didn’t rely on the government to make it happen.

    • Palm Coast Resident says:

      As a known fact that MOST people know, but not conservatives, The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

      And another fact of which most conservatives don’t know is that unlike any other public or private entity, under a 2006 law, the U.S. Postal Service must pre-fund retiree health benefits, rather than a “pay-as-you-go” system which has contributed significantly to their cash-flow losses.

      Congress, mostly Republicans with the help of some Dems are to blame for that law. It’s like having the most dysfunctional board of directors mis-manage your company.

      • Lancer says:

        Interesting. Why didn’t the dem controlled congress address and change the law when they took control Bushy’s last two years and 0bam-bams first two??

  4. Obama 2015 says:

    Technology has made the postal service, virtually, a non-entity.

    Really? Why do I have to wait on line to mail a package? USPS will never go away. UPS and Fed EX can’t do the volume they do.

    One thing is certain…that role is NOT worth the billions of taxpayer dollars it is allotted.

    USPS doesn’t take one cent of taxpayer money.

    Here is a good link on what they really need to do, Congress must act and Congress has been GOP for a few years now…

    http://www.carper.senate.gov/public/index.cfm/postal-reform-myths-vs-facts

  5. Lancer says:

    “They don’t take a cent from taxPAYERS??”

    So…why are they running on a deficit year…after year…after year? Last time I checked…USPS employees were Federal…with all the sweet heart federal benefits. Only in leftist la-la land does a government agency run on continuous deficits and leftist actually believe no cost is incurred to taxpayers.

    Wow…is it too much to hope one day leftists will understand simple finance and learn how to use a calculator??

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