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Should the USPS be privatized?

The U.S. Postal Service’s (USPS) multibillion-dollar defaults to the U.S. Treasury has renewed questions as to whether the agency should be privatized or if there’s another solution to the agency’s dire financial predicament. The USPS’s defenders—those against privatization—have been vocal; however, as the agency continues to hemorrhage money, many pundits concede that privatization may be a necessary evil. Those promoting privatization argue that at least it frees the USPS from Congress.

Matthew Yglesias, Slate

Privatization…could make a lot of sense. If it happened, rural communities would either need to pay more for mail, accept diminished service, or subsidize postal services out of their own budget. But why shouldn’t rural America face this tradeoff? Just like small towns, big cities have unique public service needs…that they’re expected to pay for on their own.

The other losers in privatization would be the [USPS’s] own workers. Postal privatization in the Netherlands hasn’t led to any catastrophic collapse in Dutch society, but it has transformed postal work into a much lower-paid occupation with grimmer working conditions.

Joe Nocera, The New York Times

Incapable of simply letting the Postal Service go free… Congress continues to micromanage it, offering various ways for it to cut costs and raise revenue. The Postal Service, for instance, wants to cut Saturday delivery to save money; a Senate bill passed in April defers that decision for two years…. The postal reform bill that has emerged from the Republican-led House of Representatives, however, does no such thing. Representative Darrell Issa, the chairman of the committee that oversees the Postal Service, talks fiercely about the need to lower labor costs, while describing the Senate bill as a “bailout.” What he is doing, of course, is using the fact that the Postal Service is going broke to impose a slash-and-burn approach—while ignoring the central reason the post office is running out of money: Congress itself.

Peter Orszag, Bloomberg

Privatization is not always the best way to improve efficiency, but the problems facing the Postal Service will be difficult to address if it remains within the government, and there is no longer any sound reason for it not to go private…. The agency has been struggling to meet [its] challenges by becoming more productive—and has been more successful than many people may realize….Unfortunately, this new efficiency has been outmatched by a deepening of the Postal Service’s predicament….Despite claims to the contrary, privatized entities do not, on average, become miraculously more productive than public agencies. Indeed, privatization can sometimes turn out to be a disaster…. In the case of the Postal Service, though, privatization has become the best path forward, mainly because it would take Congress out of the picture.

Mike Tae and Adam LaVier, The Washington Post

While privatization may offer some advantages in the long run, doing it now is neither politically tenable nor wise…. Congress would need to find a consensus to sell off the country’s second-largest employer during the longest stretch of high unemployment in modern American history.

Supporters of privatization cite the $13 billion overfunding of the USPS’s pensions. But few mention the $46.2 billion in underfunded health benefits promised to employees, which no private bidder would ever agree to take on. Immediate privatization would leave taxpayers with yet another multibillion-dollar bill.

The [USPS] can become a sustainable business and stay under government control…in a way that would lead to privatization without wreaking havoc on its employees or the taxpayers.


Even as Congress dawdles and plays political football, privatization of the USPS gains little appeal. Yet there is a consensus that anything would be better than the current stagnation. Interestingly, no one is arguing the agency would functionally improve if it were privatized; in fact, some experts suggest that quality of service and working conditions would likely decline. The upshot—the only one at that—is that privatization would free the agency of Congress’s iron grip and therefore be able to make its own financial decisions. The USPS is not yet at a point where this dramatic redefinition of the agency needs to take place. But check back in a few months: If the stalemate continues, it might be time to rethink how the USPS is governed.

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