Despite its role in the lore of the Old West, the Pony Express operated for just 18 months. While many of its rugged riders would become legends, the Pony Express and its core service — transporting mail by horse — was made obsolete by the American innovations of the telegraph and the transcontinental railroad. It was a financial disaster.
Of course, if our political system had been as “sophisticated” then as it is now, Congress would have bailed out the Pony Express, and kept it in a taxpayer-funded vegetative state for decades.
This is the situation in Congress right now, with the Democrats’ proposed Postal Service Reform Act of 2021, which aims to keep the U.S. Postal Service alive through creative accounting rather than substantive, long-overdue reform.
The Post Office has been made obsolete by the American innovations of private mail services and the Internet. It has not adapted in a serious enough way to the massive technological advances of the 21st century, losing billions every year for the last 15 straight years — totaling $87 billion. Its leadership has made soaring promises about long-term reforms that whole time, but resisted any real change.
These leaders even admit their “business and operating models are unsustainable and out of step with the changing needs of our customers.”
And all of this was before the problems of the over-reaction to the coronavirus, which has pushed the Post Office to the brink. In 2020, the bloated agency’s operating expenses increased by a margin of $9 billion more than previous predictions as everyone started ordering everything online. Despite that, the agency continued to lose money and Democrats passed a staggering $25 billion bailout that actually blocked any reform that thankfully never became law.
As is so often the case in Washington, it’s easier to lobby Congress than to fix underlying problems — and Democrats would rather cater to a public-sector union with 200,000 members than help taxpayers.
The villain behind this rather insidious cronyism is the innocently-named Package Coalition, a lobbying group of online retailers who wear their special interests on their sleeves. The coalition has coordinated a public relations campaign to keep the USPS broken in a way that’s as profitable for them as possible. They remind one of the joke about consulting that, “If you’re not a part of the solution, there’s good money to be made in prolonging the problem.”
With some double-talk impressive even by today’s Orwellian standards, the coalition pushes the ludicrous notion that the USPS promotes competition, even while subsidizing companies who deliver packages at below-market prices and pass the savings on to taxpayers in the form of bailouts.
The fundamental problem in the reform Act is a provision (Sec. 202), which provides for “an integrated network for the delivery of market-dominant and competitive products” within the Post Office. This “Integrated Delivery Network” will allow USPS to hide losses from failing services among those that might justify their existence.
See sometimes in a real business, companies include a so-called “loss leader” in their product line because they lure people into buying more expensive items: Companies lose money on razors and printers because they get such steep margins on blades and ink. But when you enjoy a monopoly and a limitless well of free money, you don’t even need to do that.
First-class mail has historically been USPS’ most profitable product, but as e-cards have largely replaced real ones, that revenue has dropped. Packages are shipped at a loss of about $1.46 each, according to an analysis by Citigroup, and revenue from first-class mail can’t compensate for it anymore. Sec. 202 will make this problem worse, as it will eliminate cost and pricing distinctions between mail – a public service where USPS enjoys a monopoly – and packages, where the private sector has provided much better service.
According to the Post Office’s own data, this bill would roll out a $40 billion “investment,” with $24 billion for “self-help management initiatives: revenue improvement,” and a planned $16 billion shortfall! Efforts by the Democrats and their Package Coalition allies are so grotesque that even The New York Times, drew attention to this cronyism last year.
Before riders could join the Pony Express, they had to swear a number of things on a Bible, including that they wouldn’t use profane language, drink intoxicating liquors, or quarrel with another member of the firm. The Package Coalition and their political puppets make no such promises, but they do promise to make a bad situation worse for their own benefit.
• Jared Whitley has worked in the U.S. Senate, the Bush White House and the defense industry.
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