May 27th, 2015
How Corporate Welfare Nearly Destroyed the Post Office
FILED TO: Politics
By Ben Cohen: If you’re looking for a clear example of how the United States government is used to protect the interests of the rich while leaving the rest of society to suffer the consequences of the free market, look no further than the debacle surrounding the U.S Postal Service.
For a variety of reasons, the Postal Service is in severe trouble. The business model is somewhat outdated and it is being seriously challenged by the exponential increase in the use of email. However, as Matt Taibbi points out, the U.S Postal Service was in fact slightly profitable before politics and big business played a very large part in its downfall, and was highly competitive with private postal services. He writes:
In 2006, in what looks like an attempt to bust the Postal Workers’ Union, George Bush signed into law the Postal Accountability and Enhancement Act of 2006. This law required the Postal Service to pre-fund 100 percent of its entire future obligations for 75 years of health benefits to its employees – and not only do it, but do it within ten years. No other organization, public or private, has to pre-fund 100 percent of its future health benefits.
“No one prefunds at more than 30 percent,” Anthony Vegliante, the U.S. Postal Service’s executive vice president, told reporters last year.
The new law forced the postal service to come up with about $5.5 billion a year for the ten years following the bill’s passage. In 2006, before those payments kicked in, the USPS generated a small profit. Not surprisingly, the USPS is now basically broke.
The 2006 law also bars the Postal Service from offering “nonpostal services,” which means the USPS can’t, say, open up a bank, or an internet cafe, or come up with any new entrepreneurial ideas to generate new income, as postal services do in other countries.
The transparent purpose of this law, which was pushed heavily by industry lobbyists, was to break a public sector union and privatize the mail industry. Before the 2006 act, the postal service did one thing, did it well, and, minus the need to generate profits and bonuses for executives, did it cheaply. It paid for itself and was not a burden to taxpayers.
Dismantling a government run entity that actually works and attempting to privatize it was a hallmark of the Bush Administration and the Republicans in general. They tried for years to destroy social security, falsely arguing it was close to insolvency and claiming the only way to save it was by privatizing it and encouraging people to put their money into the stock market (thankfully they failed – just imagine what would have happened if everyone had invested their money before the crash in 2008).
The Republicans would like to do the same thing to the USPS – not because it doesn’t work, but because there is a way to squeeze more profit out of it for big business. By privatizing an essential service like the post, you would guarantee that prices would go up when the sole motive is making profit. The government runs the Postal Service with the primary objective of providing an actual service. Private businesses are legally obliged to make a profit and will squeeze customers if necessary to increase the bottom line. We’ve seen this played out in the horrific private health insurance market where the industry works to make money, not cover the most people. As a result, the health care industry is massively inefficient at actually providing people health care, and massive efficient at lining its own pockets. There would be no reason to assume any other outcome from the postal service.
The Republicans have played a clever trick by taking a functioning, profitable government run industry, and restructuring it so that it cannot work. They have then claimed it is in inherently inefficient and led the way in destroying it – all in the name of giving big business a captive market and unlimited profits. This is a classic example of how government is used to promote the interests of the rich, or in lay mans terms, corporate socialism.
Thankfully, the legendary Sen. Bernie Sanders has managed to save the troubled service for at least the next couple of years by introducing and passing a bill in the Senate to help it modernize and survive by itself. As a consequence, it will preserve thousands of jobs and protect rural communities without internet access from being completely shut off from the rest of the world. A press release from Sanders office stated the following:
The Senate today [Wed 25th] voted 62-37 for a bill that Sen. Bernie Sanders helped craft to modernize the U.S. Postal Service, save tens of thousands of jobs and spare rural post offices and scores of mail sorting plants threatened with closure.
“This comprehensive postal reform legislation will preserve vitally important rural post offices and mail processing plants,” Sanders said. “It also would give the Postal Service the flexibility that it needs to raise additional revenue in the years to come by offering innovative new products and services in the digital age.
“There is no question that the Postal Service needs to become more entrepreneurial to meet the changing needs of the digital revolution, but the answer is not to make mail delivery slower. The answer is not to radically downsize the Postal Service. The answer is not to eliminate over 200,000 jobs in the midst of a terrible recession. The answer is not to devastate rural communities by closing their post offices,’ Sanders added.
The Republicans won’t take this lightly, and we can expect another attempt down the line at ruining another workable branch of the US government. But for now, those working in the USPS and the thousands of rural communities that rely on the service can breath a sigh of relief.