The Save the Post Office bloggers and friends were all over the airwaves this week, trying to set the record straight on how the Postal Service's manufactured crisis is leading to the end of Saturday delivery, the dismantling of the postal infrastructure, and the selling off of a priceless legacy of historic post office buildings.
You can listen to the radio shows using the audio players on this page. Here's the playlist:
- Steve Hutkins, NYU professor and editor of Save the Post Office, was on BWGBH Boston Public Radio.
- Mark Jamison, retired USPS postmaster and a regular contributor to Save the Post Office, was on both Wisconsin Public Radio and RedEye Radio. (All of Mark's pieces on STPO are archived here.)
- Phil Rubio, history professor at NC A&T and author of There's Always Work at the Post Office, was on National Public Radio. (Phil has this piece on STPO.)
- Gray Brechin, UC-Berkeley geographer, New Deal historian, and author of Imperial San Francisco, was on WNUR This Is Hell; KGO-AM; and a couple of other stations as well. (Gray has this piece on STPO.)
- Even Kalish, intrepid road tripper, post office photojournalist, and author of the Going Postal blog, was interviewed for a Washington Post video podcast.
February 8, 2013
The Postal Service has just released its 10-Q financial statement on the first quarter of the 2013 Fiscal Year (i.e., the last three months of 2012). Despite all the doom-and-gloom talk about its humongous deficit, the Postal Service had a decent first quarter. While First-Class mail dropped off again (compared to last year's first quarter), Standard Mail and parcels were up. Total revenues were virtually the same as last year, down 0.1 percent. Were it not for the prepayments to the retiree health fund and some workers' comp adjustments, the Postal Service would have shown a first-quarter profit of $144 million.
That's not how the story is being told, however. The Postal Service's press release acknowledges that package growth and "record efficiency" helped "mitigate" the losses, but it still cites a $1.3 billion deficit and says the "accelerated cost-cutting actions" remain necessary.
For their part, the news media continue to play the role of court stenographer, and the headlines are predictable: "Postal Service Posts Loss of $1.3 billion in First Quarter" (New York Times). "Postal Service Reports $1.3 billion loss" (Wall Street Journal). "U.S. Post Office Loses $1.3 Billion in First Quarter" (Bloomberg Businessweek). (Update: At least the Washington Post got it right: "Mandate pushed Postal Service into red for first quarter.")
Here's how revenues look for the first quarter compared with last year:
Overall, the main hit on the Postal Service's bottom line continues to be the $5.5 billion annual payments to the Retiree Health Benefits Fund (RHBF). If one excludes the accrued amount for the payment ($1.4 billion), as well as adjustments to long-term workers' comp, the Postal Service would have actually shown a profit of $144 million for the first quarter. On page 24, the 10-Q report shows exactly that.
Just to put the report in perspective, here's a table showing revenues and expenses for the first quarter of the past few years. (The numbers come from the USPS financial statements, available here.)
Despite a relatively decent financial report, the media will no doubt continue to report that the Postal Service ran up a $16 billion loss last year and say that's why it needs to end Saturday delivery and shed tens of thousands of jobs. Those reports typically fail to acknowledge that over $11 billion was due to a double payment to the RHBF.
While the RHBF payments were never made, they show up on the books, and 2012 includes two years' worth of payments (for 2011 and 2012), as well as over $2 billion associated with adjustments to long-term workers' comp that have nothing to do with the actual bottom line. As the USPS Form 10-K shows (page 23), during the 2012 fiscal year, the Postal Service actually lost $2.45 billion.
That's not a great year, but considering that the economy remains in the doldrums, it wasn't so bad — certainly not as bad as the misleading $16 billion figure makes it seem.
Just to show how carelessly the numbers are thrown around, consider this. A few days ago, David M. Walker penned an editorial entitled “Time to Save the Postal Service.” It’s about how “the Postal Service is in trouble” and “bleeding red ink.” According to Mr. Walker, “Something has to give — and must this year.”
Mr. Walker reminds his readers that he used to be the Comptroller General of the United States, i.e., the director of the Government Accountability Office, the legislative agency responsible for watching over the fiscal health of the government. Back in 2001, as Mr. Walker explains, the GAO put the Postal Service on its "High Risk" list because of its outdated business model (as usual, the Internet was to blame).
Mr. Walker's editorial fails to mention that in May 2002, he told Congress that the Postal Service had incurred $32 billion in unpaid pension liabilities — a figure that turned out to be wildly wrong. As the Office of Personnel Management would soon determine, the pension was actually on course to be overfunded by $71 billion (later revised to $78 billion).
In his editorial, Mr. Walker has this to say about last year's losses: “In fiscal 2012, the USPS experienced an operating deficit of almost $16 billion on revenue of about $65 billion. Granted, this deficit was exacerbated by the fact that the USPS was supposed to make two larger-than-usual retiree health benefits payments last year. But it didn’t pay either. Even if you subtract these additional scheduled payments, the Postal Service would have still run a deficit of more than $10 billion.”
Mr. Walker is apparently unaware that those two payments add up to $11.1 billion, so if you subtract them, the Postal Service would have run a deficit of less than $5 billion (even less if you subtract the workers’ comp payment).
The error may seem minor (just $5 billion off), but it's rather disturbing when you consider what Mr. Walker is up to these days. As he notes in his editorial, Mr. Walker has been asked to serve as chairman of a special panel on the Postal Service for the National Academy for Public Administration (NAPA). His main charge is to review a proposal that would privatize over half the Postal Service and turn it into a "hybrid Public-Private Partnership." Post offices would be replaced by postal counters in private businesses, and private corporations would take over the processing work, leaving only the delivery component to the government.
It’s a disastrous proposal, and it shouldn’t be taken seriously, but it will be. There are some very influential people behind it. Mr. Walker is the chief executive officer of the Peter G. Peterson Foundation, which uses its $1 billion endowment "to cast Social Security, Medicare, Medicaid and government spending as in a state of crisis, in desperate need of dramatic cuts" (HuffPost). Plus, the director of NAPA is Dan Blair, former deputy director of the Office of Personnel Management and former chairman of the Postal Regulatory Commission.
Given how much credence people are likely to put in the results of his study on privatizing the Postal Service, it would help if the former Comptroller General could get his numbers right.
February 6, 2013
The Postal Service is going to stop delivering mail on Saturdays. The change will take place in August. The Postal Service will continue to deliver parcels and to PO boxes on Saturdays, but that's about it. The Postmaster General says the move is expected to save $2 billion a year once the plan is fully implemented.
What about Congressional approval?
The first big question is how the Postal Service can do this without Congressional approval. Today’s press release says simply, “The Postal Service continues to seek legislation to provide it with greater flexibility to control costs and generate new revenue and encourages the 113th Congress to make postal reform legislation an urgent priority.”
The press release doesn’t make it clear that, as the Postal Service’s own five-year plan noted, moving to five-day delivery requires new legislation. In a statement released earlier today, Senator Susan Collins said quite clearly, "The Postal Service’s decision to eliminate Saturday delivery is inconsistent with current law and threatens to further jeopardize its customer base."
According to this morning’s New York Times report, “The agency has long sought Congressional approval to end mail delivery on Saturdays. But Congress, which continues to work on legislation to reform the agency, has resisted. It is unclear how the agency will be able to end the six-day delivery of mail without Congressional approval.”
Postmaster General Donahoe says that he can make the change without new legislation. The ban on five-day delivery is included in Congress's annual appropriations bill (not that the Postal Service gets any appropriation). The Postmaster General says that because the government is operating under a temporary spending measure rather than an appropriations bill, he can make the change in delivery on his own. He will also be asking Congress not to reimpose the ban when the spending measure expires at the end of March. (More on the legal angle, here and here.)
With postal legislation at an impasse, it’s certainly not a given that Congress would even approve a move to five-day delivery. The Obama administration has expressed its approval, and the House bill under consideration last year would have permitted the Postal Service to cut Saturdays as soon as six months after passage of new legislation. That bill never got passed, however, and one reason may be that 222 members of the House signed on to a resolution maintaining Saturday delivery.
The Senate bill would have preserved six-day delivery for two more years, and it would have permitted elimination of Saturday delivery only if other cost cutting measures were inadequate. Perhaps the Senate, under the leadership of Tom Carper, will back off this issue and allow legislation to move forward permitting the shift to five-day delivery. Or perhaps public pressure on elected officials will put a stop to the plan before it’s ever implemented.
This, by the way, is not the first time the post office has discontinued Saturday delivery. Back in April 1957, lack of funding caused the Department of the Post Office (before it was the Postal Service) to stop delivering the mail on Saturday. That lasted exactly one day. The chair of the House’s postal subcommittee summoned the Postmaster General and scolded him for the “reprehensible scare tactics” he was using to get more appropriations. Saturday delivery resumed the following week.
The questionable cost savings estimates
The next question that should be on anyone’s mind is how the Postal Service came up with the figure of $2 billion in savings. That estimate should come under serious scrutiny, as did the Postal Service’s earlier estimates when it presented the original plan to eliminate Saturday delivery back in 2010.
That plan was reviewed by the Postal Regulatory Commission in an advisory opinion issued in March of 2011. It called for eliminating all Saturday delivery except for Express Mail and delivery to those Post Office Boxes currently receiving Saturday delivery. It would have also eliminated Saturday outgoing mail processing (except for Express Mail and some destination entry bulk mail). The collection of mail from street collection boxes would have also been eliminated on Saturday. It's not clear yet how the new plan addresses those issues.
In presenting the 2010 plan to the PRC, the Postal Service said it would save $3.3 billion in operating costs and cause $0.2 billion in net revenue losses, for a net savings of $3.1 billion.
After reviewing the plan for a year, the PRC determined that the Postal Service had overstated the gross savings by $1 billion and underestimated the net revenue loss by $0.4 billion. According to its calculations, the net savings would be $1.7 billion — $1.4 billion less than the Postal Service had estimated.
The Postal Service disputed the PRC’s calculations, but their difference of opinion was never resolved. However, in its five-year business plan, presented in February 2012, the Postal Service did downsize its original estimate from $3.1 billion to $2.7 billion, but that was still considerably more than the PRC’s estimate.
The new figure of $2 billion cited by the Postmaster General in today’s announcement reflects the fact that the new proposal maintains Saturday delivery for parcels. But given that the Postal Service overstated the savings the first time around, it’s very likely that the figure of $2 billion represents a considerable overestimate of what the plan will actually save.
Unfortunately, the new estimate will not be reviewed by the PRC in a second advisory opinion, so there will be no independent analysis of the Postal Service’s calculations. You can be sure the news media will uncritically repeat the $2 billion figure ad nauseam. (Update: According to this internal USPS memo, the Postal Service will ask the PRC to "update" its earlier advisory opinion.)
A short but useful summary of the differences between the Postal Service’s calculations and the PRC’s can be found in the PRC’s 2011 Annual Report (pp. 29-30). There’s also a March 2011 GAO report on five-day delivery. Like almost all GAO reports, it recommends the cost-cutting move. Because it came out shortly before the PRC advisory opinion, it does not examine the Commission’s alternate cost savings analysis or question the Postal Service’s numbers.
Feb. 3, 2013
Earlier this week the Postal Service announced that it planned to sell the historic post office on the Grand Concourse in the Bronx, New York. There's an excellent article about the post office by David W. Dunlap in Friday's New York Times.
The Bronx General Post Office is the largest of twenty-nine Depression-era post offices in New York City. Built in 1935, it is one of over a thousand post offices constructed by FDR’s New Deal. It is also the latest addition to a growing list of historic post offices that are being marked for sale by the Postal Service.
According to the Postal Service's annual report to Congress, filed with the Postal Regulatory Commission a few weeks ago, the Postal Service has reviewed over 4,000 facilities for potential sale, and it has identified over 600 buildings “earmarked for disposal.” Many of these will undoubtedly be historic properties. The Postal Service has sold at least a dozen historic post offices over the past year, and there are dozens more for sale or under review.
Here are a map and list of those that have been sold recently or that are known to be for sale or under study for sale. Some of these post offices are listed on the USPS properties for sale website set up by the Postal Service’s real estate agent, CBRE, but most of them are listed on local real estate sites or not listed at all. The Postal Service likes to work behind the scenes on some sales, and the community often learns about the deal after it's done. (For more data about each post office and a larger map, go to the Google docs table here.)
POST OFFICES SOLD AND FOR SALE
Symbols of pride and permanence
Building post offices put people to work during the Depression, but it did something more. It showed that even in the midst of a terrible economic crisis, the federal government was capable of doing grand things. The post offices linked individuals and communities, even in the most remote areas, to the federal government back in Washington, and they served as a symbol of government permanence, service, and culture.
As Dunlap writes, the Bronx GPO is "an official city landmark, a centerpiece of life in the borough for more than 75 years, and a monumental gallery of the work of Ben Shahn, one of America’s leading Social Realist artists." The lobby features thirteen murals painted in the late 1930s by Mr. Shahn and Bernarda Bryson, his companion and later wife. Mr. Shahn also worked with Diego Rivera on the controversial mural that was removed from Rockefeller Center because it depicted Lenin.
Like most New Deal murals, Shahn's Bronx murals celebrate workers and local history. One depicts New Yorker Walt Whitman reading a poem to a group of citizens. The post office also has two sculptures, one depicting a mother and daughter looking at a letter; it's by Henry Kreiss and entitled "The Letter" (1936).
The Postal Service owns about 2,500 buildings that, like the Bronx GPO, are on or eligible for the National Register of Historic Places. About 440 of them are already on the National Register. (Here are a list and a map of the 440; a list of the 2,500 is here, and a map, here.)
Historic preservationists have recognized the threat to these buildings posed by the Postal Service's fire sale, and last year the National Trust named the Historic Post Office building to its list of Eleven Endangered Places for 2012. The Advisory Council on Historic Preservation (ACHP) is also working on the case. But nothing seems able to stop the Postal Service's plan to dismantle itself.