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Post Office Shock Doctrine: The Road to Privatization

This issue’s been driving me a little crazy since I read the piece by Peter Orszag that Kucinich mentions in the video last week.  An aggregator newsletter came in this morning with a piece by Dennis Kucinich cranked up about the issue (thank goodness and thank Dennis) ; he linked to his August 1st appearance on Democracy Now!

And Congress adjourned yesterday with no action on the issue of funding the post office, nor any drought relief for farmers and ranchers…

You remember Peter Orszag, don’t you?  He used to be the director of Obama’s Office of Business and Management?  Everyone’s Favorite Sexy Nerd?  Well, now he’s the vice-chair of global banking at: Tada!: Citigroup, and sits on the Council of Foreign Relations.

Orszag’s piece at Bloomberg opens with (my bolds throughout):

Those who believe in the usefulness of government must be vigilant about making sure all its activities are vital ones, since the unnecessary ones undermine public confidence. With this in mind, Congress should now privatize the U.S. Postal Service.

Further evidence for why this should happen came last week, when the Postal Service announced that it would be unable to meet billions of dollars in payments that are coming due in August and September for future retiree health benefits. 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.”

He goes on to say that the postal service really has been very efficient in recent years, and he totally gets that Congress won’t allow any autonomy as far as cutting costs, raising revenues, nixing Saturday deliveries, yada, yada…

But after more ‘considerations’ of the pros and cons, he dismisses all the cons, and he concludes that the Post Office should be privatized for several reasons, including the fact that in the present contrarian Congressional atmosphere, Congress won’t let the PO be fixed!  Since that is The Truth, only privatization will get this great business opportunity mail delivery out from under Congressional purview.

Thanks, Peter; smart move makin’ yavice chairman of corporate and investment banking at Citigroup Inc.

Andrew Reinbach writing at Huffpo  thinks the privatization plans may be an enormous real estate deal in the making, even though three-fourths of its facilities are now rented, not owned.  Still, the extant brick-and-mortar PO’s must be valuable.  Reinbach mentions the debt the service can’t meet, then:

 “Meanwhile, calls to privatize the USPS are being heard from mainstream outlets and on the Right. Bloomberg recently published a piece on the subject from Peter Orszag. Much on the Right issues from the American Enterprise Institute (AEI)and a group called the Institute for Research on the Economics of Taxation (IRET), which is funded by the Scaife Foundation, the Carthage Foundation, and the Charles G. Koch Foundation.

It’s hard, in this pass, not to wonder if the Right Wing is forcing the issue by creating a crisis, then pressing for action. This, after all, has been its strategy for shrinking the Federal Government — systematically starve it for money by cutting taxes and larding it with debt, then call for drastic reforms to stave off disaster, a la the Ryan Plan.”

Amy Bingham writing for ABC News:

“USPS claims that if Congress does not act, the mail service will default not only on the $5.5 billion payment due today, but also on another $5.6 billion payment for future retiree’s benefit due September 30.

The Postal Service has pleaded with Congress for years to end the requirement that it pre-fund its retiree’s health benefits. But many lawmakers claim that because USPS has such a massive workforce – there are 614,000 Postal Service employees-if it does not pre-fund retirement benefits, it will not be able to pay them in the future.

And as long as these disagreements persist, it looks like naming post offices is the closest Congress will get to passing postal reform.”

Steve Hutkins, a literature professor who teaches “place studies” at the Gallatin School of New York University, operates a website devoted to Saving the Post Office.  He tracks all things USPS, including photos (smile).  He has loads of information on the genesis of the privatization plans, and covers many issues that are critical of outsourcing to UPS and Fedex, the Board of Governors of the USPS, and much, much more.

In ‘How to Privatize the Post Office: Piece by Piece, Step by Step, he includes four steps: ‘Marketization’ (turning into a business model), ‘Contracting Out’ (Reagan model), ‘Divestiture’ (plans to close 32,000 branches by 2018), and ‘What Comes Next?’…in which he says:

“The marketization, contracting out, and divestiture will continue, at ever-increasing speed.  The Postal Service will cut the work force again and again (over a half million career employee positions have been cut since 2000), increase the percentage of part-time and flexible employees, end Saturday delivery (which will be picked up by some private company), expand the network of alternative retail outlets, and close half of the country’s 32,000 post offices.  Then the Postal Service will be a “lean and mean” corporate entity, ready for the final stage of privatization. 

What shape this will take is hard to predict. Perhaps, as suggested by the 1988 Presidential Commission on Privatization, the Postal Service will be turned into an employee-owned company through an employee stock ownership plan (ESOP).  Perhaps it will be broken up into smaller units and sold off, piece by piece.  Perhaps it will be taken over in its entirety by a FedEx, which can then skim the cream and sell off the less profitable parts.  Or perhaps, as they’ve talked about doing in Great Britain, there will be an IPO and the Postal Service will sell itself in shares on the stock market.

Trust the corporate elite to figure all that out.  Regular citizens will probably have as much to say about it as they do when a Postal Service manager comes to town and tells them their post office will be closing.”

The employee-owned business idea’s interesting, but given the vast scope of mail delivery, seems so unlikely as to almost unthinkable.

Please weigh in on this subject at will.  I’m with Dennis: reform it, but keep it; get Congress to restructure it’s health pension payments.  We still get a lot of snail mail here, and when you live out in the tulies, it’s important, even now that rural residents have to pick up mail in town.  We can still mail packages, buy stamps, packaging materials, apply for passports, purchase money orders, and a raft of other necessary things.  I can’t see letting ‘the free market economy’ take it over wholesale.

The American Postal Workers Union website is here.


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