Should the postal service be privatized?

Each Sunday, ABC15.com debuts an Arizona issue - along with two opposing sides on the topic.

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This week we're tackling the debate on whether or not postal services should be privatized.

The Goldwater Institute's Dr. Byron Schlomach argues the United States Postal Service is a monopoly, delivering only substandard service and losing billions in the process.

USPS Arizona District Manager Lawrence James contends that the post office needs Congress to get involved in order to help the agency meet the changing needs of the public and make a return to profitability.

So, should postal services be privatized?

Click "next page" to read the first of two positions, "Sell the post office".

"Sell the post office": By Dr. Byron Schlomach, Goldwater Institute

Some years ago, my wife was a Tupperware lady. Using the U.S. Postal Service, she decided to send a piece of Tupperware, called a cake taker, as a gift to her grandmother. When the parcel arrived, the rubber marks on the crushed box showed that it obviously had been run over -- about the only way to ruin a cake taker – while in the care of the post office. Because my wife had not bothered to insure something that so obviously didn't need to be insured, there was no recourse to the post office for the utterly negligent handling.

If only this were an isolated incident in my long years dealing with the post office. As a child, it mystified me why my father, a small-town doctor, had to pay the same price to have statements delivered to boxes within the building to which he delivered them as others paid to have a letter delivered across the country.

These are examples of the substandard, expensive service one can expect from a monopoly. Although subsidies to the post office are currently low by historical standards, the U.S. Postal Service is on track to lose $8 billion this year. This is a result of changing technology that has allowed us all to avoid the postal monopoly and communicate with each other electronically even as our tax money continues to prop up what we so plainly do not want.

The modern emergence of delivery services like UPS and Federal Express as well as electronics communications are not the only evidence that the post office's services can and should be handled by the private sector. In 1844, Lysander Spooner established the American Letter Mail Company in defiance of the 1792 federal Private Express Statutes that granted the post office a monopoly. Compared to the post office, Spooner's company delivered letters at a lower price, more quickly, and straight to customers' doors. The post office had to improve both prices and service in order to compete. Nevertheless, federal legal action forced the closure of Spooner's company in 1851, and Spooner also had to compete with the post office's forced subsidies from taxpayers.

Some of the post office's inefficiency is due purely to politics. The Postal Service would like to close some post office branches, but that becomes a subject ripe for Congress to exercise its weight. Similarly, the postal employee union contract and civil service rules limit the ability of the Postal Service to get rid of surly, unproductive employees.

The easiest, cleanest, quickest, and surest way to deal with the post office's issues is to get rid of it. The U.S. Constitution does not require, but only allows, Congress to establish a post office. Clearly, at least since 1844, a government-owned postal monopoly has been an anachronism.

It's time to repeal the monopoly and sell off the U.S. Postal Service's assets. The U.S. government needs the money and we could all benefit from the competition.

Do you agree with this opinion? Add a comment below to sound off.

Click "next page" to read the second position, "Postal services should not be privatized".

"Postal services should not be privatized": By: Lawrence K. James, District Manager, United States Postal Service Arizona District

"Neither snow, nor rain, nor heat, nor gloom of night…..will stay us from the swift completion of our appointed rounds."

For more than 235 years, the United States Postal Service has adhered to this unofficial creed.  But now, the agency that is responsible for delivering mail to every resident of the nation at affordable rates is facing a financial crisis.

The important issue is profitability. The Postal Service receives no tax dollars for operating expenses, and it can be profitable without being private if Congress makes some changes to allow it to operate like a business.

The Postal Service is not seeking tax subsidies. It can continue to rely on the sales of postage, products and services to fund all its operations. Moreover, the Postal Service is not seeking additional borrowing authority. Indeed, the last thing the Postal Service wants or needs is to incur additional debt.  What the Postal Service needs is for Congress to allow it access to the money in its overfunded retirement fund.  Legislation is needed to return $11 billion of overfunding of the Federal Employees Retirement System.

Undoubtedly, increased use of the Internet, combined with an ongoing recession, has had a dramatic and unprecedented impact on our country's mail volume — and on the Postal Service's bottom line, but privatization of the Postal Service isn't the answer.

The Postal Service hasn't sat idly by watching these changes happen over the past few years. On its own, the Postal Service has been doing things that any responsible business would do to improve efficiency and productivity. It has pursued every available option under its control to aggressively cut costs and raise revenues, including slashing operating expenses by more than $12 billion and reducing its workforce by 127,000 career employees over the past four years.

The Postal Service continues to consolidate processing facilities to reduce personnel and transportation costs and optimize its expansive retail network by conducting studies of approximately 3,700 retail offices for possible closure. At the same time, the Postal Service is continuing to work with local retailers to offer products and services at more convenient locations — places were people already shop, such as pharmacies, grocery stores and other appropriate retailers. This includes the introduction of the Village Post Office, an alternate access option that offers popular postal products and services such as stamps and flat-rate packaging, along with opportunities for local businesses in communities nationwide.

These aggressive efforts, however, are insufficient to close projected budget deficits. The Postal Service needs Congress to enact legislation, as soon as possible, to eliminate the current mandate requiring retiree health benefit pre-payments, which costs the Postal Service $5.5 billion annually.

Absent prompt Congressional action to modify or eliminate the pre-payment requirement, the Postal Service will experience a cash shortfall and be forced to default on its next mandated payment to the federal government to pre-fund retiree health benefits.

In order to make further progress in reducing expenses, we have developed proposals that would enable the Postal Service to establish its own health benefits program, administer its own retirement system, and adjust the size of its workforce to match operational needs and the changing marketplace.  However, Congress would need to enact legislation to allow us to further pursue these cost-saving measures.  In addition, legislation is needed that will give the Postal Service the authority to determine the frequency of mail delivery, which could save the organization roughly $3 billion each year.

The Postal Service delivers to more than 150 million addresses daily and the 167 billion pieces of mail delivered annually accounts for more than 40 percent of the world's mail. We deliver to America's homes and businesses more efficiently and at a lower cost than any comparable post — all without the financial support of the American taxpayer.  Even in an increasingly digital world, the Postal Service remains critical to the economy, supporting a mailing industry that represents more than 8 million jobs and more than $1 trillion in commercial activity annually.

Regardless of how many people use the Internet to pay their bills and send documents, the core function of the Postal Service and core need of its customers — the physical delivery of mail and packages to America's homes and businesses — will always exist. And despite doom and gloom headlines, the Postal Service can have a bright future and be put on the road to profitability if given the flexibility from Congress to operate more like a business does.

It's time for Congress to swiftly complete its rounds, and pass substantive legislation to transform the Postal Service business model — which will put the USPS on a sound financial footing for generations to come.


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