For 225 years the U.S. Post Office has been the most admired and ubiquitous manifestation of government. From 1789 until the 1960s, the Cabinet level agency saw its mission not only to deliver the mail but to aggressively defend the public good. In the late 19th century when oligopolistic mail order delivery companies abused their rural customers the Post Office launched parcel post. The competition quickly forced private companies to reduce their exorbitant prices and dramatically improve the quality of their service. In the early 20th century, when bank collapses resulted in depositors losing their life saving the Post Office created postal banks that for half a century provide security and attractive interest rates to millions of small depositors.
In 1970 Congress stripped the post office of its cabinet status and stopped providing public funding. The new quasi public corporation was urged to adopt a more business like attitude. Its name, the U.S. Postal Service, reflected a circumscribed mission statement. No longer was it to be a tool to check the predations of the private sector. Its sole mission would be to deliver the mail.
The USPS used its new flexibility and ability to borrow to dramatically increase productivity. By the 1990s, despite the elimination of a public subsidy that in 1970 had accounted for 25 percent of its total budget the USPS was generating a consistent profit. But to USPS management the mandate to operate in a more businesslike manner was viewed as a mandate to operate more like a private business, improving its internal balance sheet at the cost of weakening the balance sheet of the communities it served. Again and again Congress had to step in to prevent USPS management from pursuing actions that would have inflicted harm on the nation: stopping closing Saturday delivery, closing rural post offices willy-nilly.
In 2006, in an accounting maneuver I’ve discussed in more detail elsewhere Congress forced the USPS to pay $5.5 billion a year to do what no other public agency or private corporation does—prepay 100 percent of its future health insurance costs. As the Postal Regulatory Commission (PRC) later observed, these payments quickly “transformed what would have been considerable profits into significant losses.” Today the USPS deficit has reached $20 billion. Headlines constantly use the word “bankruptcy”, conveying the message that the post office is an antiquated institution doomed to irrelevancy in the age of the internet, but 80 percent of this huge deficit has been caused not by a decline in first class mail but by this human contrived financial burden.
The debt may be contrived, but its impact is real. USPS management is cutting its “deficit” by eviscerating the institutional commons it oversees. By closing rural post offices the USPS is delinking the institution from the community. By closing half of its processing centers, the post office is eliminating local overnight delivery of the mail, a severe burden on weekly newspapers and undermining another sense of geographic community. In 2012 the USPS announced that first class mail delivery would take at least one more day. USPS is selling off dozens of magnificent buildings constructed during the New Deal that have served as testaments to a time when the very design of public buildings was seen as part of the commons. Tens of thousands of workers with the most experience have taken early retirement, resulting in an increasingly less knowledgeable and lower paid workforce.