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Opinion

Eliminate Postal Service prefunding, not service

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Photo - MIAMI, FL - NOVEMBER 15:  A U.S. Postal Service truck is seen on November 15, 2012 in Miami, Florida. The United States Postal Service reported a record annual yearly loss of $15.9 billion, more than triple the $5.1 billion loss last year.  (Photo by Joe Raedle/Getty Images)
MIAMI, FL - NOVEMBER 15: A U.S. Postal Service truck is seen on November 15, 2012 in Miami, Florida. The United States Postal Service reported a record annual yearly loss of $15.9 billion, more than triple the $5.1 billion loss last year. (Photo by Joe Raedle/Getty Images)
Opinion,Op-Eds

With the fate of a venerable American institution older than the country itself likely to be decided by the next Congress, it's important that lawmakers, administration officials and the public understand the actual situation at the United States Postal Service.

This is a matter that should unite conservatives, moderates and liberals. There has never been, and shouldn't be, anything partisan here.

The conventional wisdom -- of a flailing agency losing billions of dollars a quarter because everyone's on the Internet, leaving no choice but sharp cuts in service -- is highly misleading. In fact, the Postal Service's financial performance has been admirable. Through the mid-2000s, the Postal Service was making annual profits in the low billions. Since 2007, in the worst economy since the Depression, the USPS has had an average operating loss of about $1.2 billion a year, or $300 million a quarter -- unsurprising given mass unemployment, extensive business failures and high foreclosure rates.

The struggling economy is pivotal because for more than 30 years the Postal Service has been self-sufficient, funding itself through revenue generated by the sale of stamps and other products -- with no taxpayer money.

So, what about the oft-cited multibillion-dollar sea of red ink? It has little to do with the mail and much more to do with politics. In 2006, Congress mandated that the Postal Service do something no other agency or company in the country has to do -- prefund future retiree health benefits. Moreover, lawmakers set a highly aggressive level -- prefunding for the next 75 years, paid within a decade.

The mandate accounts for 80 percent of all USPS red ink, $11.1 billion alone in just-completed fiscal 2012. Without it, the Postal Service could readily have weathered the tough economy. But this artificial crisis has exhausted the agency's savings, its borrowing authority and its periodic profits, while distracting it from doing what it's always done -- develop a business plan to meet the challenges of an evolving society while seizing opportunities.

Rather than rushing through a flawed bill in a lame-duck session, the new Congress should start over in January and fix prefunding. That would eliminate the biggest drain on postal finances. It also would relieve the crisis atmosphere, letting the postal community focus on developing a forward-looking plan.

Opportunities abound. Although more folks pay bills online, they're also ordering goods online -- packages that require delivery. This exploding e-commerce market already is boosting Postal Service revenue -- in fiscal 2012 alone by 8.7 percent -- as even FedEx and UPS turn to its highly efficient network to deliver their packages.

Under a program President George W. Bush began and President Obama continues, letter carriers -- of whom one-quarter are military veterans -- have voluntarily trained to deliver medicines to residents in several metropolitan areas in the event of a biological attack. The Carrier Alert program protects the elderly and disabled living alone. Letter carriers annually conduct the country's largest single-day food drive, replenishing food banks nationwide. All for free, and without a dime of taxpayer money.

Why should we care about the USPS' fate? It offers the world's most affordable delivery service. It's rooted in the Constitution. It unites this vast land. It's critical to small businesses -- including its Saturday service. It anchors a $1.3 trillion mailing industry employing 7.5 million private-sector Americans.

For 200 years, the Postal Service has faced technological innovations such as the telephone, fax machine and telegraph, emerging stronger each time. If lawmakers address the prefunding fiasco -- rather than reducing services to Americans and their businesses -- postal authorities can do so once again.

Fredric Rolando is president of the National Association of Letter Carriers in Washington, D.C.

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