Let’s get straight to the heart of the Postal Service’s problem:  A 2006 law requires the USPS to fund its retirees’s health benefits for the next 75 years.  This means that the Treasury is supposed to get a hefty chunk of USPS profits, which the Treasury sets aside to pay for retiree health care in the future.  The leftover profits get to return to the USPS only after it has met its obligations to its workers.  But the USPS is out of cash. The USPS has $5.5 billion due to the Treasury on August 1st, and it’s just not able to make that payment. Perhaps all the fuss over the payment is unwarranted; this is just one more thing that  the postal service has failed to deliver on time.

Most (perhaps all) private companies do not have to pre-pay retiree benefits, but then again, most companies don’t get a government-protected monopoly on mailboxes, an exemption from property tax, and a waiver for vehicle registration fees.  Most private companies haven’t borrowed $10 billion from the Treasury.  Can we really blame the Treasury for wanting that money back?  For wanting that money back, in installments, over time?  Can we blame the Treasury for providing a loan and then managing it the proper way?

We have been here before.  A year ago, the postal service was in this same spot: about to hit its debt limit, and unable to pay what was owed to the Treasury.  What did we do about it? We kicked the can down the road.  Congress passed a resolution delaying the deadline by which the postal service had to pay up.

Now we are stuck.  The Senate has passed a bill that would save the Postal Service from insolvency, but the House has no intentions of voting on it before the August recess.  Congress has left the game of “kick the can” and, quite literally, gone on
vacation.  So, we’re left with an insolvent Postal Service.
There are a great deal of issues with the USPS.  Large companies, nonprofit organizations, and certain government officials get huge discounts on postage.  People are sending less mail today than we did years ago.  The postal service lost 26 percent of its volume in four years.  Nearly all letter carriers are unionized.  They receive high union wages; The average letter carrier makes $51,390 per year.  An active-duty sergeant in Afghanistan with six years of experience makes $34,636 per year.  One of these people works in a place that struggles to provide day-to-day services, even with a great deal of help from the U.S. government.  The other one works in Afghanistan.  When we assign the same value to delivering letters as we do to risking one’s life for this country’s ideals, something is seriously wrong.
Some would even argue that the Postal Service’s mandate –to serve all areas of the U.S., even those that are very rural– is too costly to fulfill.  But how do you explain UPS and FedEx, which deliver all over the country and the world?  They are not mandated to do so, but by charging prices set by the market, they make it work, and they make it profitable. The major proposals for saving the USPS involve running it more like a business.  The first proposal –cutting Saturday service– wouldn’t fly with the union.  The second – shutting down rural post offices – was killed by Senators looking out for their constituents.  Because apparently some of them still do that!  So vintage!  Even laying off postal workers requires Congressional approval— approval that isn’t likely to be granted.

We can debate the details of the USPS all we want, but we ought to be focusing on the pattern that the USPS default follows.  The problem at the Post Office is a mandate to pay retirees that cannot be fulfilled because the agency is broke.  These payments represent a fraction of the Postal Service’s activity.  But the very same thing -paying retiree benefits- represents just about all of what the Social Security Administration does.
The Social Security Administration can’t exactly decide to raise revenue on its own (that would mean a tax hike – which would require Congress to act). Similarly, the Post Office cannot raise fees without the approval of a regulatory agency.  The Post Office can consider cutting certain services, though not all cutbacks would be approved – Social Security can’t exactly decide not to send out checks every
month.  The Social Security Administration is partially removed from the free market, just like the Postal Service is.
Social Security is in trouble.  Just like with the USPS, we dealt with this last year.  The government couldn’t make the payments it was supposed to – payments like Social Security – unless it borrowed more money.  We kicked the can down the road by raising  the debt ceiling.  It must be nice to be the government– every time you hit a wall, you can just move the wall and keep on going!  It’s like a Choose-Your-Own Adventure, except Congressional inaction chooses the adventure for you, and the adventure is awful.  So, that is to say, not like Choose-Your-Own Adventure at all.
Social Security is still falling down into the debt spiral.  But the postal service is showing us that default can happen to government agencies.  It will be far more expensive to fix USPS now, than it would have been to fix it before it racked a huge debt.  It’s easier to crawl out of a hole when the hole is shallow… and very difficult when the hole is billions of dollars deep.  This sets a frightening precedent for Social Security.  We should get Social Security on a path to solvency now, before it, too, has to default.  Some restructuring pain now might just be able to save Social Security from genuine crisis down the road.  Because when we ship a government agency to hell in a handbasket, the postage is devastatingly high.
Angela Morabito | Georgetown University | @_AngelaMorabito