Posted on 05/29/2015 7:25:22 AM PDT by Kaslin
The economically beleaguered United States Postal Service (USPS) is now considering expanding from its core mission of delivering mail to providing banking services. What is concerning about this is that the USPS, which has proven financially incapable of keeping its head above water (even with a government backed monopoly and $18 billion in annual subsidies), could be putting taxpayers further on the hook for this new million if not billion dollar gamble.
According to a white paper released this month titled The Road Ahead for Postal Financial Services, USPS is assessing approaches it could take to offer financial services in an effort to raise revenue. The services proposed in the white paper range from check cashing and money orders to giving out loans. The overarching problem is the USPS has been plagued by financial inefficiency for years.
The Postal Service’s most recent financial report detailed a net loss of $1.5 billion for the second quarter of FY 2015, running from January to March. On the bright side this is actually down from the $1.9 billion it lost in the second quarter last year. However this is no sign of improvement as the USPS has suffered revenue losses 24 out of the past 26 quarters and has posted multi-billion dollar losses over the last 8 years. The Postal Service is now averaging about $5.5 billion in losses annually.
Given these figures it isn’t surprising the USPS is looking for new revenue. However, the solution is not to expand services into sectors they have no business being in in the first place. For instance USPS has also been testing its hand at grocery delivery services. Instead, the focus should be on reforming and improving the core service they were created to provide – mail delivery.
Yet a lack of focus on mail delivery is not the only criticism. The USPS also has a habit of engaging in economically illogical investments. Take the slated vehicle upgrade the USPS is considering, which would see the purchase of up to $6.3 billion worth of new trucks. The estimated cost savings from this billion dollar purchase – “about $350 million” over the next decade.
One doesn’t have to be an economist to realize an investment of $6 billion for $350 million in savings flies in the face of common sense. Yet this type of financial ineptitude is one of the primary drivers of the Postal Service’s problems.
Gambling with billions in taxpayer dollars has no real consequence when the bureaucratic blinders are on because the USPS is not a private entity competing in the free market. They are a government-backed monopoly propped up by billions in taxpayer subsidies with no financial accountability and nothing to lose.
The time has come for the USPS to get its financial house in order and for Congress to examine common sense postal reforms like increased transparency and improving the core function of mail delivery. Trying to expand services to cover the costs of other failing services is like trying to put out a fire with gasoline.
American taxpayers are already on the hook for billions from the Postal Service’s bureaucratic blunders, they shouldn’t be expected to be on the hook for another.
That’ll be the roach motel for savings.
I have heard about this vehicle purchase. The mail trucks in the picture would be used out in the country also. This would be a major mistake to use these vehicles on country roads in all seasons. They would not do the job. But, post office bureaucrats are smart you know.(sarc)
Post offices in many other countries offer banking services.
Particularly in Europe. Which is no doubt why Liberals like the idea.
Unfortunately, Woodrow Wilson won that election and morphed the plan into the Federal Reserve and the Income Tax. There are scores of podunk little towns which cannot support a post office but could support a post office and a postal bank. Since it seems impossible to close post offices or downsize postal workers, giving them more work might be a viable option.
In return, they would have to agree to more competition such as working weekends and evening hours and dropping their opposition to letting private non-union entities open postal operations such as is currently done on a limited basis in the Staples stores.
The US Post Office has been involved in such activities before (namely, the US Postal Savings System).
If all emails were required to have a valid digital cert then those same certs could be revoked if a certain number of complaints were received against it. So, by purchasing digital certs virtually all SPAM would be eliminated (who wouldn't pay for that?!)
Libs like the idea for several reasons.
- It would provide banking services to even the poorest Americans, and hence, they hope, run payday loan stores out of business.
- They can offer basic services at low or zero fees, and put lots of pressure on the BIG EEEEEEEEVIL BANKS.
- It could become a conduit for stimulus, as the Fed could simply wire a deposit directly into the account of every American with an account there (yes, they have actually discussed this).
Ditto Japan.
In most states I can CCW into financial institutions. I can’t into a post office. I will not be doing monetary activities where I cannot protect and insure my own safety.
To be fair to the Post Office it is the only part of the Federal government that is required by law to fully fund all of its future health care obligations for retirees...even for postal workers who haven’t even been hired yet.
It’s required under the Postal Accountability and Enhancement Act of 2006.
Prior to this law the USPS paid their health care obligations annually just like any other agency or business does.
I’m old enough to remember that the Post Office used to have a savings account system. [I was one of the patrons.] As I recall, they paid a magnificent 2% interest on their deposits. They stopped offering this service in the mid to late 1940’s.
That would probably be a good thing. It is better to have a government business take off the mask and exploit the poor directly . . . plus get the resulting blame. The government deducts the loan payback directly from their government check and thereby ensures payment AND profit from the interest.
Not if they are required to be self-sustaining as is the Japan Postal Savings system. They can't offer checking accounts, just savings accounts and micro-loans. Debit cards, maybe? Yes, they will have an advantage by being able to deduct loan payments directly from government checks. But that would be about all. The banking business to the poor can be very profitable, $35 overdraft fees and the like. That's why so many of them opt out of the banking system completely or, at least to the extent that they pull cash out once their government check arrives.
Not all that different from the existing system, at least to the extent that they pull cash out once their government check arrives. They might actually leave it in a little longer now, maybe even buy savings stamps (remember them?) to trade in for savings bonds.
The 2% return wasn't all that bad in those days. TR and Taft both wanted to strengthen it to add additional banking services and it was very popular in rural areas which were neglected by the commercial banks.
Woodrow Wilson paid homage to the idea, but instead used it to leverage into the Federal Reserve system. It remained active for another generation or so because commercial banks still shunned rural and isolated areas. It became largely obsolete with World War II and the subsequent spread of the automobile which largely ended rural isolation.
As a schoolboy (mid-1960s), it functioned only as a conduit to sell savings stamps (10 cents magenta with the minuteman statue) which could be collected in a book and exchanged for savings bonds. Any other Freepers remember these?
PO clerk: “Yes sir. Can I help you?”
Citizen: “Yes. I made a deposit at the counter here last week and it hasn’t shown up in my account yet.”
“OK sir. Do you have a receipt for the deposit?”
“The clerk was going to email it to me but I never received it.”
“Well sir, without a receipt, it will be hard to track the deposit. Was it cash or check?”
“It was cash. The clerk said his system said the email went thru. I just never received it.”
“Well sir, the only thing I can suggest is that you fill out this 10 page form, in triplicate, give it to me, and give us 30 days to track it down.”
“Thirty days?! I have to make a house payment. I can’t make it without that deposit.”
“But sir, there really is nothing I can do about that. Will there be anything else? It’s my break time. Would you like some stamps before I go?”
They better get a fleet of armored cars for mail delivery.
There’s something to be said for offering free banking services to the poorest Americans. I’m very careful to keep enough of a balance on accounts so I don’t have fees or monthly charges. Those minimums have become out of reach for a lot of people.
The Germans operate the ‘Post Bank’and while in the AF in the 1990s....I was a member with the bank. Low fees were obvious and for several years....I had no complaints. The low fees came to an end, and the bank came to admit they just weren’t sustaining any kind of profit. Significant fees started up and I’d say that a quarter of all members quit within six months. Anyone who says that low or free banking services would be sustained under this gimmick....is lying. They are simply getting the system in place where the gov’t will have to pay the fees for the poor. You the tax-payer will pay for their services in the end.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.