Saving the Post Office (or Not)

The U.S. Post Office is drowning in red ink, posting multi-billion dollar losses every single quarter of the year.

Their solution?

Charge more, provide less.

I kid you not, this is the strategy being pursued by the Post Office in 2012.

They’re going to save an estimated $3 billion in expenses when they:

  • Slow down first-class postal service.
  • Eliminate next-day delivery for letters.

Oh, yeah… they’re going to raise the cost of a first-class stamp, too. So you get the privilege of paying more for slower delivery times.

Cutting Costs at the Post Office

The USPS’s cost-cutting plans also involve consolidating processing centers, closing 3,700 post office branches, and laying off approximately 100,000 employees. (You can verify these statistics here.)

The one thing I don’t see in the plans is a reduction in retiree benefits, and that just blows my mind.

This year the Post Office owes $5.5 BILLION in retiree health benefits alone. That does not include pension pay, which makes the figure much higher.

The first thing the Post Office should do (if they want to survive) is reduce or eliminate retiree benefits. Retirees add NOTHING to the business… and never will. They will continue to be a net drag for years, possibly decades.

The Big Myth People Have Believed for 70 Years

The big myth people have bought into ever since World War II is the idea that, once you retire, a company will take care of you until you die.

While this has worked for a few lucky people at the front end of the curve, it simply will not work for “the rest of us.”

The traditional retirement equation works something like this: Work 40 years, get paid for 60+.

But since when does this math add up?

Best-case scenario, for this equation to work, you’d have to be underpaid by at least 33% for 40 years.

Of course, retiree benefits are considered sacred. And in the Post Office’s case, they are actually required by law to pay retiree health benefits in advance

In announcing the financial results Friday, officials also said that questions remain about the Postal Service’s ability to make a $5.5 billion payment to prefund retiree health benefits. That’s a congressional mandate postal officials have long argued is onerous.

Frederic V. Rolando, president of the National Association of Letter Carriers, agreed. He said the announcement about the Postal Service’s finances comes as no surprise and underscores the need for changes.

“For the Postal Service to improve its financial situation, the government must let USPS manage its financial affairs in the most effective manner possible like any other business,” he said.

“Essential to that process would be for Congress to fix an onerous congressional mandate from 2006, which obligates the Postal Service to make annual payments of $5.5 billion to prefund future retiree health benefits.,” Mr. Rolando said. “No other institution in America, public or private, has to do this.”

Maybe the Post Office isn’t so crazy after all. They would change how retiree benefits are handled — if they could.

But they can’t.

This video explains it well:

Yet Another Case of Government Meddling

I have two observations:

Observation #1. The U.S. government has a clear conflict of interest. They are receiving $5.5 billion per year from the Post Office to prefund retiree benefits. That means the money does not need to be immediately spent on retiree benefits, so the Treasury probably spends it on other things. (This is how Social Security works. Money paid in today is not saved in a segregated account. It goes into a general fund where it is then spent on everything but Social Security.)

Observation #2. The Post Office is suffering financially because of government meddling. For the Post Office to be viable long-term, they must be allowed to operate as a private business without interference from the Congress or laws that prevent the Post Office from operating efficiently. As Rolando says so well, “The government must let USPS manage its financial affairs in the most effective manner possible like any other business.”

Of course, I’m highly skeptical the Congress will ever take its grubby hands out of the Post Office’s pockets.

Therefore, the USPS will most likely face bankruptcy in the near future. Then everybody who benefits from that system will be screwed, including the Postal employees and the retirees and the customers who send and receive mail.

In the end, nobody will win.

And Congress is doing their level best to make sure of it.

-Ryan M. Healy

Ryan M. Healy

Ryan Healy is a financial copywriter and the author of Speed Writing for Nonfiction Writers. Since 2002, he has worked with scores of clients, including Agora Financial, Lombardi Publishing, and Contrarian Profits. He writes a popular blog about copywriting, advertising, and business growth, has been featured in publications like Feed Front magazine, and has been published on sites like,, and

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