US Postal Service Bailout Imminent?

Tyler Durden's picture

It has long been known that the United States Postal Service, in its current money-losing format, is unsustainable. The media has reported in the past that in order for this bloated government anachronism to be remotely competitive in the age of email and FedEx, it would need to cut hundreds of thousands of its workers. Even the USPS, via its largest union, the National Association of Letter Carriers, has admitted that the organization will need to undergo "tough sacrifices" although as the WSJ noted, "It didn't specify what concessions it would seek from members." And this is where it gets fun: because "just the tip", or even just talking about the tip, apparently is more than labor unions in this country can stomach. Enter Ron Bloom, Lazard, and the very same crew that ended up getting a taxpayer funded bailout for GM. From the WSJ: "The Postal Service's proposal to close thousands of post offices and cut back on the number of days that mail is delivered "won't work" and would accelerate the agency's decline, according to the six-page report by Ron Bloom, President Barack Obama's former auto czar, and investment bank Lazard Ltd., LAZ who were hired by the union in October." That's right: after all the huffing and puffing about "sacrifice" and austerity, the labor union took one long look at the only option... and asked what other option is there.

"Instead, the report says, the agency should raise its stamp prices, which are among the lowest in the world, and find new ways to profit more from its built-in advantage as the only entity to reach every American home every day." Well that... And the internet. "It should also replace its multi-layered governance system with a corporate- style board of directors whose members have entrepreneurial experience." Translation - let's just continue doing what we do, but kill demand for our services even more, because it is not the massively bloated expense side of the ledger that is the issue, it is how much the USPS charges. And apparently in mailman econo-logic, increasing prices leads to increasing demand, all else equal. At least this bailout plan came in 6 pages, as opposed to the 3-page one penned by Hank Paulson. Yet the kicker is that the "other option" is well-known: taxpayers get to fund another wholesale bailout of yet another worthless, ineffective government organization. But hey: there are hundreds of thousands of labor union votes, pardon, jobs to be saved. And with elections just 6 months ahead, is there any doubt what will happen?

More from the WSJ:

The proposals are the opening salvo in what is expected to be a long series of negotiations as pressure mounts on Congress to approve legislation to restructure the Postal Service, which has said it is in danger of becoming insolvent without changes to its business model.


The union's plan is one of several competing proposals—including the Postal Service's and bills in Congress—that are promoting rescue ideas, and it illustrates the deepening divide over how to remake the 236-year-old institution for modern times.

And the shocker:

Labor groups, for instance, generally oppose cuts to service. The mailing industry opposes higher postage fees. Many legislators say the Postal Service needs to close facilities—but not in their district. And a Republican-led bill set to be heard by the full House looks askance at any proposal that would allow the Postal Service to compete with private industry. That bill's backers say the agency should act like a business—to a point. "Reducing excess capacity and adapting delivery to America's changing use of mail is exactly what any business would do as technology changes the market," said Ali Ahmad, a spokesman for the House Oversight and Government Reform Committee.

In other words, "fix it", just don't make me lose anything in the process... or work harder of course. In the meantime...

The Postal Service is facing historic losses—more than $5 billion in its most recent fiscal year—that it attributes to a shift in communication habits in the digital age and to an unusual requirement imposed by Congress in 2006 that it fund retiree benefits decades ahead.

Ironically Ron Bloom is spot on. It is unclear however, if his statement was tongue in cheek:

The union concedes that some "shrinkage" in the system is necessary, Mr. Bloom said, but he added that the Postal Service's cuts will result in more revenue losses than savings.


He compared the Postal Service's strategy to General Motors Co. before its restructuring. "Their strategy was to lose slowly, to shrink to survive," he said.

Where Ron stopped short is that going from before to after restructuring involved billions in taxpayer cash. Yet unlike a just as bloated Chevy Volt post-reorg maker (not yet retrofitted with excess inventory Solyndra solar panels), at least the USPS can not stuff excess mail inventory in mail boxes. What it certainly can, however, is demand billions from taxpayers. Because, you know, if we just hope enough, things will change.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
misterc's picture

It began as a mistake.

It was Christmas season and I learned from the drunk up on the hill, who did the trick every Christmas, that they would hire damned near anybody, and so I went and the next thing I knew I had this leather sack on my back and was hiking around at my leisure. What a job, I thought. Soft!

(Excerpt from Charles Bukowski's Post Office)

I think I need to buy a gun's picture

i don't know what i'll do just today i got a UPAK and victoria secret catalog, I also got an advertisement from ford on how much gas and money i'll save if i go buy an f-150 tomorrow

YC2's picture

I get a coupon catalog in spanish and an overdraft notice for a former resident every single day of the week.

Also, Ive seen statistics that 50% of food is thrown out in america.

I feel like for those who are not as wasteful, a reduction in "standard of living" might not hurt so much, depending on what parts are cut out. 

YC2's picture

Also, many would be surprised at the amount of business that the govt does with FedEx, UPS, and DHL.  Or not. 

Cdad's picture

Ron Bloom is literally a boil on the ass of America.  Get this clown out of DC...and quickly so.

The Alarmist's picture

That picture is vaguely reminiscent of the Monty Python Twit Olympics, which actually is a grand parody of the United States Congress circa 2012.

The shame of the matter is that the Post is Constitutionally mandated, and actually rather easy to run as a business, and they can't get that right.  So we are supposed to have faith that they get right the other 99% of Federal spending on quasi- and un-Constitutional and nebulous at best in terms of a business proposition?


Isotope's picture

No, it's not mandated. The constitution gives congress the power to create and maintain a postal service and post roads, it doesn't require that they do it.

A Nanny Moose's picture

"Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds."

Mother nature ain't got near the same power as few missed paychecks.

FEDbuster's picture

Just think how bad off other govt. agencies, unions and businesses would be, if it were mandated that they fully fund penisions and retiree heathcare benefits.  Not defending the post office or their unions, but come on no one else is funding the future Ponzi.

AldousHuxley's picture

law passed in 2006 requires prepayment to fund for health benefits for
future retirees. 10 year plan 2007-2016. About $5.5 Billion required
each year. This is a manufactured crisis via a poison pill. The current
$44 Billion in fund has enough to pay benefits for 20 years.


USPS made $9.5 Billion profit from 2003-2006


It is just politicians getting their hands on the money just like 401k, pension, social security scam to spend it now, pass the buck to the next guy later.





LasVegasDave's picture

Why not just give the country to those cocksuckers?

Only way govt stops growing is firepower directed on the target

taxpayer102's picture



Ron Bloom is a sellout, picked by investment bankers to setup the USPS for a "bailout" conditional on it being taken over by wall street thieves.

salvadordaly's picture

In reply to CH1

I will spare you the click,,,

 American Letter Mail Company

Being an advocate of self-employment and opponent of government regulation of business, Spooner started his own business called American Letter Mail Company which competed with the U.S. Post Office. Postal rates were notoriously high in the 1840s,[7] and in 1844, Spooner founded the American Letter Mail Company, which had offices in various cities, including Baltimore, Philadelphia, and New York.[8] Stamps could be purchased and then attached to letters which could be sent to any of its offices. From here agents were dispatched who traveled on railroads and steamboats, and carried the letters in hand bags. Letters were transferred to messengers in the cities along the routes who then delivered the letters to the addressees. This was a challenge to the United States Post Office's monopoly.[7][9] As he had done when challenging the rules of the Massachusetts bar, he published a pamphlet titled "The Unconstitutionality of the Laws of Congress Prohibiting Private Mails." Although Spooner had finally found commercial success with his mail company, legal challenges by the government eventually exhausted his financial resources. He closed up shop without ever having had the opportunity to fully litigate his constitutional claims.[citation needed] The lasting legacy of Spooner's challenge to the postal service was the 3-cent stamp, adopted in response to the competition his company provided.[10]

valley chick's picture

Many folks would be surprised on how many UPS, FED EX, DHL packages are brought to the post office for the Post Office to deliver.  Thats right...not all packages are delivered by the other companies so drop them off at the local post office for the postal carriers to deliver.  So be careful what you wish for. 

aerojet's picture

That's a relatively recent development--an attempt to keep postal employees delivering something.  I'm sure the private carriers would adapt if USPS cuts back.

valley chick's picture is by contract.  Many are not familiar with the contract.  Cost effective for the other courier services. Don't think for one minute that the other courier services would not raise their fees if they did not the contract with the USPS. 

AldousHuxley's picture

that's because USPS delivers where it is unprofitable for forprofit couriers as your right.

But most people live near cities and this is just subsidy to red state rednecks living in middle of nowhere needing taxpayers to subsidize them.

valley chick's picture

Wow ..3 down arrows on fact.  Reality check.

mkkby's picture

Raise the price of stamps until there's no more junk in my box.

Only deliver every other day.  What difference does it make if I get my electric bill on Monday or Tuesday?  I'm not gonna pay it until the 1st anyway.

onthesquare's picture

the only mail I want starts off with  "Pay to the Order of..."

The trend is your friend's picture

This is terrible news.  I won't get my bills on time or all thise great credit card offers.


Who will deliver their unemployment checks? 

The trend is your friend's picture

The postman always rings twice......Here"s Johnny

The Alarmist's picture

I thought it was all direct deposit now.

aerojet's picture

If it's anything like tax refunds and now SS money, the Internet will do it--faster, cheaper, and safer.

Ag1761's picture

Hey Tyler, where did you get the mail man uniform, love you in that picture :-)

PY-129-20's picture

Yes, but remember they had great postal carriers - like Newman or Cliff Clavin.

slewie the pi-rat's picture

the check is in the unionMail

HamyWanger's picture

What you are lobbying for ZH, the USPS closing shop???

You may be fortunate enough to have a computer with Internet and be able to pay FedEx fees, but not all Americans are the same. The regulated tariffs of the USPS are a blessing for many. 

xela2200's picture

You can access the internet for free at most libraries. All I get in the mail now a days is junk. All bills and statements are either sent to my email or accessible through the bank's site. Maybe, we could use the money wasted in snail mail to provide a free national wifi zone.

Midas's picture

Uh, are libraries free?  Cause there was something about them on my last tax bill....

max2205's picture

New rumor: USPS to be folded under TSA

TSA isn't a profit center and how better to keep track of all of us

DCFusor's picture

Nearest library to me that has internet is 24 miles away.  Kind of far to walk.  And gas to get there is more expensive than a stamp.  But the PO on a rural route comes to me, sells me stamps, picks up mail and so on.  They are pretty hard to live without in rural areas, and UPS and Fedex often come late as they don't want to come all the way out here for just one package, so they wait till they have a few.

Their problem is they give super low rates to bulk mail, which is most of what they carry these days, and of course, the bad managment and the big union.  They'd be doing most of us a huge favor by jacking up bulk mail rates, frankly.  On the other hand, that snail spam gives great heat from the woodstove in winter.

LeBalance's picture

oooooh let's just take all POSITIVE CONTRACTS into illusion LECTRO land.






and if you did not get it xela.

fuck you.

your horse.

your mom's horse.

and your mom's horse's fleas.

xela2200's picture

Well thought argument. It shows your mental capacity. Don't strain yourself now.

Demologos's picture

You mean the libraries that have not been sold off to for-profit companies?  The new "private library" will charge a hefty premium for using their computers and spy on everything you do to boot!'s picture

Maybe you are fortunate enough to be able to overpay for services which could be more efficiently provided in a competitive market but not all Americans can afford to throw money away like that. Times are tough.

nmewn's picture

I envision a giant mail drop in town for the rural, pick it up when you go for more random carbon footprints thrown into the atmosphere six days a week for personalized delivery systems. No more ruts running off the sides of roads scarring nature. And no more M80's in the mailbox at graduation or

Central planning, its the most cost effective & green thing to do ;-)

onthesquare's picture

Take a lesson from Hooterville and early America.

narnia's picture

It's Constitutional for the federal government to operate the post office, but that doesn't mean the federal government must or even should operate the post office.

NotApplicable's picture

Hey everybody, it's Hamy-time!


duo's picture

do you really think if only FedEx and UPS were left, they could deliver a #10 envelope (business) across the country for $0.50?  It would at least be $2.

NotApplicable's picture

Guess what? The USPS can't do it either! Otherwise they wouldn't need constant bailouts.

Why is this so hard to understand?

Freddie's picture

ZH is still filled with a lot of f**ks who voted for the islamic.

stocktivity's picture

Show me one 'constant bailout" the postal service got in the past.

Demologos's picture

Stocktivity is the only one who seems to not have a conservative talking point to grind, including the Tylers.  The USPS has been completely independent of the federal budget for a long time.  The problem is that they can only raise the price of stamps in relation to the "official" inflation rate.  Of course, we all should know that the "official" inflation rate is a lie perpetrated to stiff the Social Security fund for what should be much higher COLAs.  That is why the amount people get from their Social Security payout is so paltry.

Remember, that the "official" inflation rate does not  include fuel prices.  When the price of fuel for the post office trucks and the jets flying airmail goes up, the USPS can't adjust the stamp prices to make up for it.  They just have to hope the fuel costs eventually go down.  Meanwhile, service suffers.  It has to come from somewhere.

The capper is that the Bush Congress passed a law forcing the USPS to fund the pension system fully for 75 years into the future.  That's right, by 2016 it has to be funded for people who have not been born yet that might be postal employees.  What other corporation, company or business has to do that?  This stunt was done to intentionally kill the post office.  And yes, FedEx and UPS will jack up their rates five minutes after the post office closes their doors.

fxrxexexdxoxmx's picture

How many USPS retirees are getting two retirement checks. The first one from a branch of the military and the other from the USPS? How about the workers at the USPS simply get their contibution from SS only? Since the USPS is essentially a branch of the government who has always gotten free money from the feds, why the need for a seperate reitree benefit.

If the UPS can compete with the market then the employees could have a 401k just like UPS and Fed Ex? If anyone says they are not a branch of the government how much previous federal employment is used to calculate test scores, vacation, and sick leave?

NidStyles's picture

Better to pay up front rather than through inflationary taxation.