Tough Realities for the U.S. Postal Service


The United States Postal Service is looking more and more like a small version of our government: inefficient and mired in debt.

The USPS is set to default on $5.5 billion in obligations this month, setting itself up to be a key component of yet another partisan showdown of too much government and too much spending versus free markets.

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The USPS wants to cut 220,000 jobs -- 100,000 through attrition and 120,000 through cuts. No politician will want to sign off on this with job creation at zero last month.

The USPS has asked to cut Saturday delivery, which is a small part of overall expenditures but something it cannot afford. Also to be cut are 3,700 small post offices around the country that cannot be supported with the small volume of mail and business that they do.

Where this all starts to sound similar to other tales about government and unions is the fact that the $5.5 billion in obligations is to its retirement plan, and those that are saying the plan is well funded don’t want to make this payment. Sounds an awful lot like our state retirement plans, where government has refused to enact spending cuts and used future obligations as its free money to keep spending -- while creating a future problem for someone else to deal with.

I believe the USPS does a great job; we have as good of a mail delivery system as anywhere in the world, and at a reasonable price. However, the excess infrastructure has to be cut at some point, which politically is a nightmare.

The main problem I have with the USPS is the advertising it does with taxpayer money. The TV ads that are put out are promoting a below-market rate on postage due to government subsidies -- hurting FedEx (NYSE:FDX) and UPS (NYSE:UPS).

FedEx and UPS are private businesses. Together they employee over 600,000 people, and I think it is a horrible precedent to let the USPS advertise its wares, taking business from private enterprise, when there is not fair competition.

The USPS has been out-negotiated by the unions -- again, sounds familiar -- and something has to be done with the no-layoff clause that the unions have with the USPS. It is renegotiate or go bankrupt.

There is already opposition to no Saturday mail, with claims that those in rural America will not be able to get their newspapers and medicine on the weekends. I can’t see the merit in this argument, as they will have the news a day, or two, late -- and if they run out of medicine due to no Saturday delivery then something bigger is the issue.

I believe Congress will find a perfect problem here to have another stalemate and massive amounts of debate while solving nothing. Told you it was familiar.

The USPS suffers from e-commerce taking the place of snail mail and a huge bureaucracy that hasn’t been allowed to adapt. The USPS has historically low volume, and revenue, in mail and historically high costs, and the gap is widening. Something has to change.

John Layfield, formerly known as JBL, was the longest reigning WWE Champion in Smackdown television history, retiring after 17 years of pro wrestling. John, a former collegiate All-American and pro football player, is a lifelong entrepreneur who has worked as an investment banker, is series 7 and 24 qualified, and is currently an active private investor. His Internet radio show can be heard at

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