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A Post Office Bank and the Democrats (Part I)

A Post Office Bank is actually #8 of the 12 Point Platform, and not #1 ("A Living Wage"):

8. Post Office Bank

but who said I had to be linear? This is not, let me say at once, the definitive, "final" supporting document for the Post Office Bank, but the result of my current research, such as it is. In fact, I picked this topic because I thought it would be easy, low hanging fruit. In this part, I'll put the Post Office in political context (comments from readers very welcome; this is complicated). In the next part, I'll describe the policy, and what happened when the Post Office proposed it.

Article I, Section 8 of the United States Constitution enumerates the power of the United States Congress to:

To establish post offices and post roads;

Although there was considerable debate in the Eighteenth and Nineteenth Centuries over what "establish"[1] meant, by the time that Rural Free Delivery was initiated in the 1886, and then Parcel Post in 1913, the current paradigm that we think of when we think of "the Post Office" was set: Universal service, physical plant in the form of retail branches, sorting centers, trucks, etc., and a uniformed civil service staff, unionized. Note that the Post Office was transformed by Nixon, at the dawn of neo-liberal political dominance, although this paradigm still applies:

Until 1971, mail delivery was handled by the Post Office Department, a Cabinet department in the federal government. Postal worker strikes prompted President Nixon to pass the Postal Reorganization Act in 1971, transforming it into the semi-independent agency we now know as the United States Postal Service. The USPS in its current form runs like a business, relies on postage for revenue and, for the most part, has not used taxpayer money since 1982, when postage stamps became “products” instead of forms of taxation. Taxpayer money is only used in some cases to pay for mailing voter materials to disabled and overseas Americans.

Except the Post Office not only doesn't, but shouldn't be run "like a business" -- just like every single function of government should not be, when you think about it -- because of the universal coverage mandate. Of course, the idea of universal service is an affront to the neo-liberal market state, the physical plant is an opportunity for neo-liberal looting, and the unions have to be busted (though this is not always successful). So we can see at once that the Post Office is a target of opportunity for neo-liberal privatization schemes. And we know the basic architecture of such schemes[2].

  1. Degrade the quality of govenment services,
  2. Create scandal or panic at the degradatation in the media,
  3. Privatize them, and
  4. Profit!
  5. No underpants gnomes, these neo-liberals!

Open season! Here's how the Neo-liberal Gnomes are handling Step 1 in the case of the post office. Time (2013):

Since 2006, the Post Office has been legally required to pre-fund health benefits for future retirees at a cost of around $5.5 billion a year. For the first time last year, it defaulted on its annual payment.

When Congress imposed those mandates in 2006, the Post Office was doing just fine. Digital communication had yet to take such a huge bite out of the amount of mail the USPS processed and delivered. First-class mail volume was about 97 billion pieces in 2006. So there wasn’t much of a backlash when Congress decided that the Post Office was healthy enough to lock in health benefits for future retirees — for the next 75 years, mind you, something no other public or private agency does.

Two years later, the U.S. was hit by the Great Recession at around the same time that mobile communication and things like online bill payments were growing at explosive rates. The Post Office began reporting massive deficits from which it has yet to recover. Last year it delivered only 68 billion pieces of mail.

So far the Post Office has placed about $44 billion in that pre-retiree account. Without the mandate, the Post Office’s financials — while still not completely healthy — would be much more stable.

PBS underlines the financial point, making it clear how artificial the entire situation is:

Operationally speaking, the USPS nets profits every year. The financial problem it faces now comes from a 2006 Congressional mandate that requires the agency to “pre-pay” into a fund that covers health care costs for future retired employees. Under the mandate, the USPS is required to make an annual $5.5 billion payment over ten years, through 2016. These “prepayments” are largely responsible for the USPS’s financial losses over the past four years and the threat of shutdown that looms ahead – take the retirement fund out of the equation, and the postal service would have actually netted $1 billion in profits over this period.

And Felix Salmon says this about the pre-funding requirement uniquely imposed on the Post Office:

Congress requires the Post Office to make inordinately huge pension-plan payments, for reasons which nobody can really understand.

Or, alternatively, some people understand all too well. Charlie Pierce (2012):

People go out of their way not to mention it, but the USPS is in trouble because Congress saddled it with a preposterous regulation in 2006 regarding how it would pay out its pension and medical benefits. This was done deliberately, so as to cause the kind of default that we are seeing today, so that the public-sector competition would one day be eliminated. Let them succeed and watch entire swaths of the country lose mail service entirely.

On pensions, Salmon goes on to say:

[I]n the final analysis, USPS pensions are a government obligation, and it doesn’t make a huge amount of difference whether they come out of a well-funded pension plan, a badly-funded pension plan, or just out of US government revenues.

In other words, if Congress had been interested in solving the pension problem, it would have solved the pension problem, as opposed to imposing unique requirements on the Post Office.

Finally, the Post Office, like Medicare, has been significantly hollowed out by neoliberal infestation as it is:

The Postal Service increasingly relies on outside corporations for everything from sorting mail and transporting it by air and ground to advertising and I.T. consulting: Last year, the agency spent more than $12 billion on such contracts, according to Husch Blackwell, a law firm that represents Postal Service contractors. The USPS even hires some of its competitors to help it do its job, including the United Parcel Service and FedEx, which was the Postal Service's highest-paid supplier in 2011. "The postal service essentially has privatized everything but the last mile of delivery," Goldway says. The number of mail delivery routes served by outsourced carriers increased 84 percent to nearly 10,000 between 1998 and 2012, according to a recent report by the Congressional Research Service. There is now a thriving industry of third-party companies contracting with the USPS, including large publicly traded corporations such as presorting mail firm Pitney Bowes.

Combine all this with the fact that the Post Office is increasingly reliant on bulk mail, as people use email instead of letters, and pay bills online, and no longer by check, and then throw in a depression, and you have a weakened institution with predators circling.

But the Post Office still has its defenders, and still has assets. It may be, in fact, that the greatest asset the Post Office has -- even greater than its physical plant, and one that privatization would destroy -- is the public trust:

Our greatest strength is supernatural.

Last year, at the direction of the Postal Regulatory Commission, a host of consulting firms measured what the PRC calls the "social benefit of the mail." It's a nearly intangible quality of the Postal Service -- its aura of Rockwellian nostalgia -- that many experts point to as a reason it should be preserved, despite its financial struggles. It's the factor that might lead people to bank at their post office instead of at the local Chase branch; that explains why putting a post office in a shopping center attracts and boosts small businesses that locate there; and that makes Congressional representatives reluctant to cut post office locations and hours (along with their fear of striking a nerve among voters who are passionately attached to old-fashioned mail, that is).

Because of its on-the-ground local infrastructure and its veritable army of couriers, the reports commissioned by the PRC noted the Postal Service's unique ability to deliver disaster relief provisions in an emergency such as a hurricane or bioterrorist attack. The Urban Institute hypothesized that crime rates in neighborhoods were lower during mail-delivery periods, though the study was suspended. "There is evidence that the presence of visible uniformed personnel who are well-recognized by the public play an important role in the social control of neighborhoods," the researchers wrote.

In his days as a letter carrier, Partridge says, he both lent a hand to a senior who fell down and helped a toddler find his way home. "When you have people going to people's houses five or six days a week, they put out fires, they see people who are sick," says PRC chairman Goldway. "They're sort of an extra police force."

Well, I'm not sure "social control" and "an extra police force" is exactly the category I'd put Mike, my local letter carrier, or Joe, who delivered the mail to my mother, but I'll take it (as well as the light this throws on elite thinking, and what the elite are willing to pay for).

This, then, is the political context in which, as we shall see, the Post Office Bank was proposed in 2012: "How can we give the Post Office something to do?: On the Commons summarizes the problem and the solution:

The solution to the post office financial deficit is simple. Give it back the money Congress, as a result of pressure from the CBO[3, has stolen from it over the past years. Then make future payments into the health fund for retirees actuarially based. Once this artificially generated financial noose is removed from the postal service’s neck we can get on with helping it navigate the shoals of an uncertain future. To do this the postal service must build on its two most important assets: its ubiquitous physical infrastructure and the high esteem in which most Americans hold it. In combination, these assets offer the post office an enviable platform upon which to create many new revenue-producing services. But to do this Congress will have to remove another burden imposed by the 2006 law: a prohibition on the postal service offering non-postal services. Like issuing licenses (e.g. drivers, hunting, fishing, etc) or contracting with local and state agencies to provide services. Congress should also lift the prohibition on the post office shipping wine and beer. In offering new services the USPS could learn from post offices in other countries. The French post office offers banking and insurance services. Remember that from 1911 to 1967 the US Post Office successfully and profitably ran a nationwide postal savings bank. The Swedish post office will physically deliver e-mail correspondence to people who are not online. But before any of this will happen we need to fess up. The postal crisis is contrived. Let’s stop scaring ourselves silly with make believe deficit monsters and unshackle this national asset.

"The present crisis" being step 2; "contrived" being step 1. The answer the post office itself gave to "What can we do?" was a Post Office bank. In Part II, we'll look ad this policy and how -- I know this will come as a surprise to you -- the Democrats deep-sixed it.

NOTES

[1] For example, Andrew Jackson wanted the Federal government to regulate the actual content of mail, because abolitionist literature was giving the Slave Power agita. John Calhoun, however, was opposed to this, on the grounds of State's Rights!

[2] I added step #2 to the original, as opposed to treating it as a component of Step 3 ("privatize!"), since its useful to be abke to frame the horror stories when they appear. The same play is being run at the Veterans Administration, for example, and I believe the Tories are privatizing NHS hospitals using the same scheme (although scandals due to privatization seem to have cropped up rather rapidly).

[3] A better, future post would examine the destructive role of the CBO. It looks like the CBO created "the break in the skin" through which the neo-liberal infestation was able to enter... This is the part Salmon says nobody "can really understand." Pierce doesn't talk about it either.

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mitzi muffin's picture
Submitted by mitzi muffin on

Hi Lambert,

Nice job. There's a typo on a date in the beginning:

"Rural Free Delivery was initiated in the 1986, and then Parcel Post in 1913,"

Shouldn't that be 1886?

Thanks for the article. It's infuriating that they'll destroy even this wonderful institution unless we scream and yell.

Submitted by lambert on

Of course, we are in a new Gilded Age. Nevertheless...

* * *

This is just a quick potted history, and I bet there are a lot of institutional subtleties I've missed: The effects of the transition from taxpayer funding, management's role, the unions' role, and the role of the CBO (probably just as destructive as for single payer).

Alexa's picture
Submitted by Alexa on

"Degrade the quality of govenment services,"

IIRC, this past Dec 26 was the approximate date that many of the Postal Service mail processing centers began to close.

Now, instead of our Netflix DVD's arriving the very next day after the Netflix center mails them, it's the NEXT day.

Which obviously deflates the value of all of the DVD programs because of the lagging turnaround time.

(We also have the streaming service, but the bandwidth cost can add up, so we also utilize the older DVD plan.)

But I really feel bad for those people who rely on paying bills using snail mail (which, mostly, we do not).

Alexa's picture
Submitted by Alexa on

Oops!

For clarification, I am trying to say that instead of mailing back/returning a Netflix disc one day, it being received overnight at the Netflix distribution center with a replacement disc going back out to us the same day, and therefore arriving the very next day after it is mailed--it now takes an additional day for the disc(s) to reach us.

Whew!

;-)

Submitted by lambert on

I changed from a street address to a box number, on the assumption that the locals could just swap my mail easily. Well, it indeed used to be forwarded mail was sorted at a facility in a city nearby Bangor, so forwarding from one local address to another took a day or so.

But now, all forwarded mail is sent to a facilty in Massachusetts, so the process takes a month!

And the tragedy is, it just doesn't have to be that way.

Submitted by marym on

Thank you for writing about this, and for including it in the 12 Point Platform

Today:

Dozens of labor, faith and progressive groups launch the "Campaign for Postal Banking" today; more on it from me tomorrow.

On-going protest against Berkely post office closing – haven’t found anything more recent than December

http://www.dailycal.org/2014/12/07/protesters-continue-occupation-sale-b...

https://www.facebook.com/savetheberkeleypostoffice

Thanks, too, for including the link to the looting of the post office buildings themselves. Not only the postal service, but these functional and often beautiful facilities, and the artwork, belong to all of us.

https://about.usps.com/who-we-are/postal-facts/history-preservation.htm

Submitted by marym on

Salon post today by David Dayen

Yesterday, fifteen consumer, progressive and labor groups inaugurated the Campaign for Postal Banking, demanding the creation of a “public option” for affordable financial services for unbanked and underbanked Americans. The campaign denounces the high cost of what they call “legal loan sharks” like payday lenders and check-cashing stores, and lauds the array of benefits for millions of people from fair access to simple banking services. And they plan to build public pressure on the Postal Service management to establish postal banking under their own authority, without having to go through Congress.

The founding members include leading consumer watchdogs like Public Citizen and Americans for Financial Reform, faith and progressive organizations like Interfaith Worker Justice and National People’s Action, the Alliance for Retired Americans and all four major postal unions.