February 15, 2013
The Postal Service has just released the results of a survey it commissioned on its plan to end Saturday delivery. The Postal Service press release says the survey shows that 80 percent of Americans support the new delivery schedule.
Before you take that conclusion very seriously, there are a few things you should know about the new survey.
First, the survey was “fielded online.” That means that the people who most depend on the Postal Service and Saturday delivery — those who aren’t online all the time, like seniors and people in rural areas without good broadband — were excluded from participating in the survey.
Second, the Postal Service says that the survey used “a blended sample of panel and non-panel.” That means some of the people surveyed were recruited to participate. The Postal Service doesn’t provide any information about how the recruitment was done or who was selected to participate or what portion of the thousand people surveyed was pre-selected. One can only imagine how the selection process might have skewed the results.
Third, and perhaps most importantly, the survey includes questions that are framed in ways that inevitably affect how people responded. The first question on the survey, for example, is: “Before today, do you recall hearing anything about the financial losses that the Postal Service experienced last year, of approximately $15.9 billion?”
The survey thus begins by presenting the participants with a huge deficit number, which undoubtedly inclines the average person to favor cost-cutting measures like ending Saturday delivery.
Subsequent questions on the survey are even more likely to bias the results. One question says: “After learning that this change will ensure that the Postal Service does not experience an interruption in service, to what extent do you support the decision of the Postal Service to begin delivering mail five days per week and packages six days per week, including continuing package delivery on Saturdays?”
Another question says: “After learning that this change will ensure that the Postal Service does NOT have to raise the prices of mail service or package delivery in the near future, to what extent do you support the decision of the Postal Service to begin delivering mail five days per week?”
The next question says: “After learning that this change will ensure that the Postal Service does NOT become a burden on U.S. taxpayers, to what extent do you support the decision of the Postal Service to begin delivering mail five days per week?"
The Postal Service thus basically tells survey participants, "If we don’t end Saturday delivery, we may need to raise postage raises, or we might have to look for a bailout from the taxpayer, or we may not be able to deliver the mail at all." These are obviously scare tactics designed to elicit the responses the Postal Service wants from the survey. They are not unbiased questions intended to get useful survey results.
The survey was conducted by IPSOS, a global market research company headquartered in Paris. The survey describes IPSOS as “a leading independent, publicly-listed market research company.” The survey is so patently biased, one has to wonder how IPSOS could have agreed to conduct it.
Perhaps it would be useful if the Postal Service conducted another survey that provided some actual facts about the context for its plan to end Saturday delivery — something that explains the causes for the deficit, the problems with the plan, and so on. Since the Postal Service is unlikely to commission such a study, Save the Post Office is conducting its own.
Like the IPSOS survey, ours is online, so the results are skewed toward Internet users, but we've tried to set up the questions in a more informative and objective way than the Postal Service did.
If you have a moment, please take the survey, and then click on the link to see the results so far. We'll be sure to share them with the Postal Service.
If you want to share the survey, email a link to this page (here) or go directly to the survey on Google docs here and forward that. (If the survey isn't appearing below, try refreshing your browser.)
Image source: Chicago Tribune
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.