Costco Connection

Pushing the envelope

United States Postal Service at historic crossroad

By David W. Fuller

TRUE OR FALSE: The first three months of 2011 were a profitable operating quarter for the United States Postal

Service (USPS).

Answer: True.

All of this has led to a lot of rumors, trial balloons, posturing and politics surrounding the future of the Postal Service. Will delivery be cut back to five days? Just how many—and which—post offices will be closed? Will first-class mail, a money loser, be eliminated?

very important part of the American economy and American society,” he tells The Connection in his office in Washington, D.C. “I think sometimes, with the Internet age and everything else, people kind of downplay that.”

That’s right. If you are First stamp talking about receiving and issued in 1847 delivering mail and packages throughout the United States, along with a few other services, the Postal Service is profitable. In fact, from 2006 through 2010 the USPS turned an operational profit of $700 million. Then why the perception that it is going broke and in a downward spiral?

In some quarters of Washington, D.C., and other places, the very mission and nature of the Postal Service, perhaps even its continued existence, are being reexamined.

In search of perspective on this state of affairs that likely will affect every member of

Those who agree with Donahoe, who takes the reins after 20 years of service in the USPS, are quick to note the Postal Service actually predates the formation of the U.S. government (Ben Franklin was the first postmaster general), and it receives its mandate of universal service from the U.S. Constitution.

There is no doubt email has greatly reduced postal volumes. There is no doubt major workforce reductions have not fully compensated for lost revenue, which has negatively affected the bottom line. But that impact pales in comparison to a double burden: the pre-funding of employee retirement and healthcare benefits. To date, the pre-funding amounts to more than $50 billion. This year alone, the addition to that obligation will be $5.5 billion.

THOMAS BROWN/FEDERAL TIMES

Yet, a paper released in February by the USPS’s Office of the Inspector General poses this question: “What is the nation’s essential need for the Postal Service in the 21st century?” Donahoe eschews what he terms this “college campus” approach of “starting from square one,” and insists it will be postal customers who determine the future of the USPS, not the academics or politicians.

Take that debt burden away and the USPS becomes immediately profitable, at least for the time being.

Postmaster General Patrick Donahoe heads the USPS at a great crossroads in the Postal Service’s history.

The impact of the digital revolution will continue to erode the number of magazines and catalogs mailed, the number of bills being

Nevertheless, because of its Constitutional mandate and the fact that its budget is part of the federal budget, politicians will have a lot to say about the Postal Service’s future. For starters, there is that huge issue of the pension and retirement pre-funding. Only Congress can repeal the provisions of the 2006 Postal Accountability and Enhancement Act that require the pension and healthcare pre-funding. Two bills currently working their way through Congress may have a better chance of passing than bills put forth in previous

sent and paid by mail, the number of first-class letters being sent to friends and family. With or without relief from the pre-funding requirements, the USPS faces further downsizing.

Costco in one way or another, The Connection spoke with Postmaster General Patrick R. Donahoe, who officially took over his post, a presidential appointment, in January after longtime Postmaster General Jack Potter, a veteran of two administrations, retired. For a captain assuming the helm in the middle of a storm, Donahoe remains astonishingly upbeat. “The fact is, the Postal Service is still a

Congresses. Donahue, fresh from testifying on Capitol Hill a few days before we spoke, said both bills could provide relief, but he expressed concern about their fate. “I would feel more comfortable if it were moving in a more positive direction,” he says.

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Politics also come into play when it comes to closing post offices. As one congressman commented during Donahoe’s testimony, only partly facetiously, he was all for trimming post offices—“just not in my district!”

There is little disagreement in Washington that the Postal Service needs to address the ongoing challenge of rightsizing operations to compensate for declining mail volumes. Mail reached a peak of 213 billion pieces in 2006 and has steadily declined, with 172 billion