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Why the Post Office will never make money (and a lesson for health insurance)

By: David Freddoso
Commentary Staff Writer
08/23/09 11:48 AM EDT

Consider this letter, sent Friday by Sen. Bob Casey, D-Pa. to the Postmaster General.

Dear Postmaster General Potter: I am writing to express my deep concern regarding the recent announcement that the United States Postal Service (USPS) is considering closing 37 post offices in Pennsylvania. I am well aware of the financial challenges that the USPS faces, and I am committed to working with the Postal Service to overcome these challenges while preserving jobs and the services on which thousands of Pennsylvanians depend....

Casey's letter could be viewed as either a kind offer of help or a threat. Either way, it represents a non-market pressure on the business dealings of the USPS. Could Federal Express or UPS survive, let alone make a profit, if they had politicians breathing down their necks regarding essential business decisions? Could any private business survive in a competitive marketplace under these circumstances? The likely answer is no.

This applies in the case of nearly every quasi-governmental venture. Politicians from both parties, beginning with President Clinton and including President Bush, prodded Fannie Mae and Freddie Mac to expand the pool of mortgages whose risk they would assume to include the credit-unworthy. We have since reaped the disastrous results of this business decision made for political reasons.

The lesson: hybrid government-business ventures have political aims which inevitably come to cross-purposes with their business goals.

Along the same lines, consider the much-debated government-run "public option" health insurance plan. Assume, generously, that it will not gouge and ultimately destroy its private competition through predatory pricing. How many lawmakers will pen letters like Casey's, in hopes of micromanaging this government-run insurance company's insurance activities? Can anyone take seriously the Obama administration's claim that a government-run insurance company will not begin receiving taxpayer subsidies, the moment its clients begin demanding additional services from their congressmen?

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Reader Comments

All comments on this page are subject to our Terms of Use and do not necessarily reflect the views of the Examiner or its staff. Comment box is limited to 250 words.

Reis

Aug 23, 2009

I once testified before a House committee on my agency budget. We wanted to close an office in a Western state because it had done absolutely no business for years . . . the Congressman told us if we closed that office he would block our budget. We kept the office open and, as far as I know, though this was years ago, it is still open. So much for politians.

bonbon

Aug 23, 2009

What never seems to be remarked upon nor admitted is the thousands of "citizens" who send letters TO their congress persons and senators. Is it REALLY citizen pressure, who does the tally? Who has access to THAT information and who has actually used it? Are there any "investigating reporters" on that.

Rosita

Aug 24, 2009

The national debt, Fannie Mae, Freddie Mac, the Postal Service, the IRS, Social Security, Medicare, Medicaid, the War on Drugs, the War on Poverty, public education...and the list goes on. With such a impressive string of failures, how can anyone possibly believe that the Federal Government is capable of managing national health care?

Craig

Aug 24, 2009

I worked for USPS for 18 years. I never saw a Post Office closed due to lack of business.

We used to joke about 2 of our offices which were so close together that, had the Postmasters not each been 90 years old, could have played catch.

In 1996 a consultant constructed a 10 year model for USPS which said by 2006 business would be so bad that only 250,000 employees would be needed. Rather than heed the warning, senior management fired the consultant.

StepIntoTheLight

Aug 24, 2009

ChicagObama made the perfect reference during one of his latest "campaign" style lectures about the necessity for health care reform, comparing it with the US Postal Service.

Let's review, shall we. USPS has continued to raise rates every year, yet the President continues to lie and promise that health care will be deficit neutral, which is just code for get ready for all taxes to be raised to pay for it...

ChicagObama is wrong...we need health care reform, which is practical and cost-effective, not some glorified liberal promise-keepers payout to big Pharmaceuticals, lobbyists, and cronies.

Yet another lie in the ChicagObama mistake we have to deal with for another three years. That is if our nation does not go completely broke!

BIGGUN

Aug 24, 2009

The USPS was profitable just 3 years ago. It was debt free also. USPS is self supporting (no federal appropriations).President Bush(w) signed off on restructuring in 2006. ALL top USPS officials are now GOP appointees (Postmaster general,Board of Governors,Postal Regulatory Commission). President Obama just replaced PUC chairman but she hasn't taken her seat. They still haven't fired the officials that drove that agency into near bankruptcy. That where change starts, at the top!

Lanier Y Chapman

Aug 24, 2009

Rosita is right. All those government agencies should be abolished: Medicare, Post Office, Social Security, Department of Health, Education, etc.

BigTom

Aug 24, 2009

Both Obama and Sebelius have stated that the Public Option is not the "Essential Thing" in health care reform, but, no one says exactly is that "Essential Thing" is! We really need to know before we move ahead..

Nobama - No Peace

Aug 24, 2009

BIGGUN is full of it. The USPS has a DREADFUL history of mismanagement and bureaucrat bungling that it's the joke of the rest of the world. All civilized nations have a functioning postal service. Except THIS one.

$600 toilet seat, anyone?

Aug 24, 2009

I've got an old Herblock cartoon from the early '70s which shows a caricature of the postal service as a snail, saying "cancel Saurday delivery? Just when I was about to catch up to it?".

The postal service has been dying a long slow death for years. For all of the talk of it being a "private self-supporting enterprise" it is still government entity which has to answer to the likes of Casey (and Obama), and is a government-protected monopoly. Any national health plan will be in exactly the same mold.

Aug 24, 2009

The Postal Service is several billion dollars in debt, and lost more than 2 billion last quarter.

wtm

Aug 24, 2009

Anyone looked at indian reservation health care. It is a federal program and IT SUCKS. but then there are not enough indians to vote anyone in or out of office, so why treat them well.

old one

Aug 24, 2009

Nobama- please do some investagating before you post your hate of Obama, the postal service was breaking even(which is what it is suppose to do)in 2006 until it was force to put 5 billion dollars a year into a retirement account,USPS is the only federal agency that has to pay for its employees military retirement,

StargazerInSavannah

Aug 24, 2009

No government operation is run efficiently! One of the major reasons for continued failure is the incompetence of lawmakers and the dishonesty of administrators.
Our current economic disaster is, for the most part the fault of legislators. The bonus payments to the Wall Street tycoons isn't nearly as outrageous as the bonuses collected by members of the Adminstration like Eric Holder.
Public transportation (read as light rail) is a bottomless pit that tax dollars will be be pored into much like the much touted 'green energy'. When thinking of waste, think of the hundreds of billions of dollars that have been poured into 'Public Radio'. I am now in my mid seventies, and never in my lifetime has their been a justification for either public radio or public TV they are and always have been a liberal cesspool.

arosebyanyothername

Aug 24, 2009

The Post Office ruined my daughter's wedding. Invitations were mailed in October and most of them did not get delivered until March, one as late as April 10th. The wedding was in early December. They also lost the wedding pictures but the photographer was kind enough to make another copy of the CD's. I don't send anything that I really need to arrive in a reasonable amount of time through the post office anymore. If this is any indication of how the government runs things, God help us if it ever gets it's hands on the healthcare!

blockpuisher

Aug 25, 2009

Fact. The US Postal Service is the best run Post Office in the world. Fact, The USPS give the best value of any Postal System in the world. Those are facts, you can't argue with them. And no matter how much you hate Obama, you can't compare his plans to anything connected to the Postal Service. And from some of the posts on this site, I have to agree with H L Mencken: "No one ever went broke UNDERESTIMATING the intelligence of the American public"

NALC Stud

Aug 26, 2009

To All of you complaining about how messed up government programs are and how health care reform is doomed, why don't you guys campaign to do away with Social Security, Medicare, SCHIP, Veterans Administration Hospitals etc... since they examples of how bad the government programs are? Some of you writing here are probably benefiting from some of the programs I just listed, but that's ok, it's hte "other" programs you don't enjoy that are bad, right?

Phil O

Aug 26, 2009

Blockpuisher, just because it maybe the best run NATIONAL postal service in the world or cheapest doesn't mean that it is the best system available. Fedex and UPS are clearly in better shape and are run better than any nationally owned postal service(remember Fedex and UPS are privately owned)! YOU GET WHAT YOU PAY FOR!!! SAME WITH HEALTH CARE!! Think about YOUR argument before making digs on the American public's intelligence. WE DO NOT WANT ANOTHER GOVERNMENT RUN SYSTEM! WE WILL GLADLY PAY FOR THE HEALTH CARE SYSTEM WE WANT!!! NO MORE CRAPPY CHEAP FREEBIES FORCED ON US FROM THE GOVERNMENT!

king

Aug 27, 2009

So blockpuisher, you'd be in favor of lifting the monopoly ban on UPS and FedEX to deliver regular mail? I'll bet you $100 USPS goes out of business in 5 years (without subsidies)./

king

Aug 27, 2009

NALC Stud, Bush tried 5 years ago. (And didn't go far enough in my opinion)/ Then the Demoncats stopped it with the politics of fear. God liberals' memories are short.

ChicagoBob

Aug 30, 2009

The USPS has the monopoly on delivering mail, envelopes and such. FedEx and UPS skim the cream in the form of package delivery. They have no interest in delivering mail, it's too expensive. Can you imagine the UPS truck pulling up to your house and delivering the Thursday grocery store ads. I didn't think so. On another note, a quick read of most of the posts here tells me you anti-government folks have little or no idea of the facts (public radio being supported with 100s of billions of dollars) or what the services you seem to hate really do for you and your friends. There are problems, yes, and many things need to be reformed but most of the problems are the result of the GOP majorities over the last 30 years. Look to your own back yard before you start you usual knee-jerk blaming.

KeithFL

Oct 13, 2009

Why do some of you say the USPS is broke? What a joke. They profit more than $1B annually. Yet according to their own policies are not supposed to make a profit only break even. Yet, they continue to raise their prices on postage. What a croc of crap this is.

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Why the Post Office will never make money (and a lesson for health insurance)

By: David Freddoso
Commentary Staff Writer
08/23/09 11:48 AM EDT