The Future
Initially, embezzlement charges against a post office employee were investigated, but evidence led to several other employees before democrats in the House of Representatives moved to close the inquiry. A new investigation was started by the postal service resulting in embezzlement and money laundering charges. The Committee on House Administration began its own investigation, breaking through party lines. Democrats issued a report stating that the matter was closed, while republicans issued their report including a number of unanswered questions and problems with the investigation.
In July of 1993, Postmaster Robert Rota pleaded guilty and implicated democratic Representative Dan Rostenkowski of Illinois and democrat Joe Kolter from Pennsylvania. Both were accused of conspiracy to launder post office money through stamps and postal vouchers. Finally, in 1995, Rostenkowski was convicted and sentenced to eighteen months in prison until President Bill Clinton pardoned him in 2000.
The True Role of the United States Post Office
The role of the United States Postal Service is to operate as a basic and fundamental service provided by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service basic function is to provide postal services to link the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to the citizens and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.
Until the Postal Reorganization Act of 1970, the U.S. Postal Service functioned as a regular, tax-supported, agency of the federal government. In 1982, U.S. postage stamps became sold as products rather than a form of taxation. Since then, the bulk of operating cost has been paid by customers through the sale of products and services rather than taxes.
The United States Post Office does get some taxpayer support. Around $96 million is budgeted annually by Congress for the "Postal Service Fund." These funds are used to compensate the post office for postage-free mailing for legally blind persons and for mail-in election ballots sent from US citizens living overseas. A portion of the funds also pays for providing address information to state and local child support enforcement agencies.
Each class of mail is expected to cover its share of the costs. This is a requirement that causes the costs of different classes of mail to vary. Postal rates are established and proportioned on a fair and equitable basis. Under federal law, only the Postal Service can handle or charge postage for handling letters. Despite this monopoly worth some $45 billion a year, the law requires that the Postal Service remains neither makes a profit or suffers a loss.It is supposed to break even.
Today's Postal Woes
The Postal Service, by law, is an independent establishment of the Executive Branch or government. The service doesn't normally use tax dollars for operations, but it has exhausted a $15 billion loan from Treasury. The Postal Service defaulted twice last year on required payments to the federal government. The Postal Service's financial woes continue as the agency waits on Congressional action to address its debt.
A key culprit in its current decline is the 2006 congressional mandate. This states that the post office has to prefund healthcare benefits for future retirees. This mandate has forced the United States Postal Service to borrow billions of dollars from taxpayers. Much of the $11.1 billion loss is due to the costs of future retiree health benefits. Included with this is an operating loss of $2.4 billion, lower than the previous year.
Postmaster General Patrick Donahoe has said that the post office reduced costs by boosting worker productivity, but that mail agency has been hampered by congressional inaction. The Postal Board of Governors, which oversees the United States Post Office, tells us that mail volume fell to 43.5 billion pieces from 43.6 billion earlier this year. The board, which asked for measures to cut costs, endorsed the post office's recent move toward suspending mail delivery on Saturday.
The data presented by the post office did show an increase in advertising mail from the 2012 election. The agency's packaging and shipping services continue to grow, increasing by 4% in the first quarter. This year, extra mail tied to the November elections and stronger revenue from holiday-related packages contributed to a better quarter.
Donahoe has made it clear that the Postal Service could have been profitable had Congress acted. "It's critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health."
The Senate did pass a postal bill in April that would have provided financial relief by reducing the health payments and by providing an $11 billion cash infusion. This cash infusion would have been considered a refund on overpayments the Postal Service made to a federal pension fund. The House, unfortunately, stalled over a separate bill that would allow for aggressive cuts, including an immediate end to Saturday delivery.
The post office had an operating revenue of $65.2 billion in fiscal 2012. This amount was down $500 million from the previous year. Expenses for 2012 climbed to $81 billion, up $10. billion. This was largely due to the health prepayments. The annual payment of roughly $5.6 billion was deferred for a year in 2011, resulting in a double payment totaling $11.1 billion that became due this year. The Postal Service is the only government agency required to make such payments.
The post office also has also witnessed declining mail volume. As more people and businesses continue switch to the Internet to pay bills or to communicate, less volume is being produced for the post office. The number of items mailed in the last year was 159.9 billion pieces, a 5% decrease, much of it in first-class mail.
The post office is reporting some growth. Its shipping services, which include express and priority mail, grew by 9 percent. This helped offset much of the declining revenue from first-class mail.
Without legislative intervention annual losses might exceed $21 billion by 2016. If Congress fails to intervene, there could be postal shutdowns that would have undeniable consequences for workers whose jobs depend on postal services.
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