Those who believe in the usefulness of government must be vigilant about making sure all its activities are vital ones, since the unnecessary ones undermine public confidence. With this in mind, Congress should now privatize the U.S. Postal Service.This ignores the fact that the US Post Office, one of the functions specifically mentioned in the Constitution, is actually running a primary surplus.
Further evidence for why this should happen came last week, when the Postal Service announced that it would be unable to meet billions of dollars in payments that are coming due in August and September for future retiree health benefits. Privatization is not always the best way to improve efficiency, but the problems facing the Postal Service will be difficult to address if it remains within the government, and there is no longer any sound reason for it not to go private.
It is having money problems because, in 2006, the Republicans required them to fully fund their pension plan out to 75 years over a 10 year period.
Right now, the Post Office is on track to default on a $5.5 billion pension payment to the US treasury tomorrow:
The U.S. Postal Service affirmed it won’t make a required $5.5 billion payment due tomorrow to the U.S. Treasury for future retirees’ health care, an obligation the agency said must end for it to become financially viable.Just in case your wondering, the USPS is on a pace to lose about $12 billion this year, after taking into account paying for the retirement of people who haven't been born yet.
The service has said for months it couldn’t afford the payment, which was initially due last September, nor a $5.6 billion payment required by Sept. 30 for this year. Postal legislation passed by the U.S. Senate on April 25 would slow the schedule for those obligations. The House hasn’t acted on a different postal measure aimed at changes to help the service cope with declining mail volume.
“This has no effect on mail processing or delivery, no impact on post offices, and employees will continue to get paid,” Dave Partenheimer, a Postal Service spokesman, said today in a phone interview.
Their pension is grossly over funded, (A true rarity in the US) and if they did not have to make these payments, then they would be turning something on the order of an $8 billion profit.
But according to Orzag, the real problem is that Post Office is not able to unleash its free market super-powers.
It's really all about allowing his cow-orkers at Citi to generate the enormous fees that would be the product of any privatization this massive.