POSTAL NEWS
NO.
69/2012
Formulated by UNI-JAPAN POST
In cooperation with UNI APRO, ASPEK INDONESIA
and SPPI
|
- Postal service to default on $11.1b bill
Boston
Articles
July 31, 2012
WASHINGTON — The US Postal Service is bracing for a
first-ever default on billions in payments that are due to the Treasury, adding
to widening uncertainty about the mail agency’s solvency as fewer and fewer
people mail first-class letters and Congress deadlocks on ways to stem the red
ink.
With cash running perilously low, two legally required
payments for future postal retirees’ health benefits — $5.5 billion due
Wednesday and another $5.6 billion due in September — will be left unpaid, the
mail agency said Monday. Postal officials said they also are studying whether
they may need to delay other obligations. In the coming months, a $1.5 billion
payment is due to the Labor Department for workers’ compensation, which for now
it expects to make, as well as millions in interest payments to the Treasury.
- Cost Of Future Post Office Retirees' Health Benefits Driving Possible Default
Topics: Health Costs, Insurance, Marketplace
Jul 31, 2012
The Associated Press: Post Office Nears Historic Default On
$5B Payment
The U.S. Postal Service is bracing for a first-ever default
on billions in payments due to the Treasury, adding to widening uncertainty
about the mail agency's solvency as first-class letters plummet and Congress
deadlocks on ways to stem the red ink. With cash running perilously low, two legally
required payments for future postal retirees' health benefits — $5.5 billion
due Wednesday, and another $5.6 billion due in September — will be left unpaid,
the mail agency said Monday. Postal officials said they also are studying
whether they may need to delay other obligations. In the coming months, a $1.5
billion payment is due to the Labor Department for workers compensation, which
for now it expects to make, as well as millions in interest payments to the
Treasury (Yen, 7/30).
This is part of Kaiser Health News' Daily Report - a summary
of health policy coverage from more than 300 news organizations. The full
summary of the day's news can be found here and you can sign up for e-mail
subscriptions to the Daily Report here. In addition, our staff of reporters and
correspondents file original stories each day, which you can find on our home
page.
- Post office to launch mobile remittance scheme
PTI | 09:07 PM,Jul 29,2012
Kottayam, July 29 (PTI) Postal Department is launching an
instant money remittance scheme, mobile remittance scheme, in tie-up with the
BSNL infrastructure by next month, Chief Postmaster General (Kerala Circle)
Sobha Koshy said today. In the first phase the scheme will be implemented in
selected states like Kerala, Bihar, New Delhi
and Punjab, Koshy told reporters after
releasing a special postal cover in connection with the ruby jubilee
celebrations of Kottayam Press Club. In Kerala the scheme will be implemented
in selected 30 post offices in Idukki, Aluva and Pathanamthitta. As per the
scheme a person can send money through the post office which will send a
message to the other post office about the amount to be given to the other
person, she said. Koshy said the process of computerising the entire postal
network in the country, numbering 1,55,000 post offices, was going on. In
Kerala out of 1507 post offices, except 29 post offices rest are computerised.
The department is also planning to implement a range of products including
e-post facility instead of letter, electronic money order scheme by which upto
Rs 5000 will be sent with a small message, M O Videsh and pick-up service. PTI
GKN
- Best fix for Postal Service is to take it private
By Peter Orszag, Bloomberg News
Thursday, July 26, 2012
Those who believe in the usefulness of government must be
vigilant about making sure all its activities are vital ones, since the
unnecessary ones undermine public confidence. With this in mind, Congress
should now privatize the U.S. Postal Service.
Further evidence for why this should happen came last week,
when the Postal Service announced that it would be unable to meet billions of
dollars in payments that are coming due in August and September for future
retiree health benefits. Privatization is not always the best way to improve
efficiency, but the problems facing the Postal Service will be difficult to
address if it remains within the government, and there is no longer any sound
reason for it not to go private.
The Postal Service faces three problems: First, Congress has
not given it the permission it needs to cut costs and raise revenue — and
lawmakers seem unable to approve even modest reforms. Second, its market has
been declining for years, as email, electronic payment and other alternatives
to traditional mail have grown. Third, the economic slump has caused a further
drop-off in mail volumes.
The agency has been struggling to meet these challenges by
becoming more productive — and has been more successful than many people may
realize. As the Cato Institute (hardly a bastion of support for government
operations) has noted, a decade ago sorting 35,000 letters an hour required 70
employees. Today, it takes only two. Over the past six years, the number of
career Postal Service workers has declined by more than 20 percent.
Deeper predicament
Unfortunately, this new efficiency has been outmatched by a
deepening of the Postal Service’s predicament. Over the past five years alone,
mail volume has fallen more than 20 percent, and revenue has declined 12
percent. The post office lost $25 billion from fiscal year 2007 to fiscal year
2011. It now has less than $1 billion in cash, a dangerously small amount for a
service with weekly operating expenses of almost $1.5 billion. Of the roughly
32,000 local post offices across the country, fewer than 7,000 generate enough
revenue to cover their costs.
Which brings us to privatization, a path already being
followed for postal services in countries such as Germany,
the Netherlands and Japan.
Despite claims to the contrary, privatized entities do not, on average, become
miraculously more productive than public agencies. Indeed, privatization can
sometimes turn out to be a disaster — as has been the case with the financially
troubled U.S. Enrichment Corporation, which produces enriched uranium for
nuclear power plants, since it was unwisely pushed out of government by the Clinton administration’s
Treasury Department during the 1990s.
In the case of the Postal Service, though, privatization has
become the best path forward, mainly because it would take Congress out of the
picture. As New York Times columnist Joe Nocera recently argued, “the problem
is that neither the management nor the workers really control the Postal
Service. Even though the post office has been self-financed since the 1980s, it
remains shackled by Congress, which simply can’t bring itself to allow the
service to make its own decisions.” And Congress won’t do so, as long as the
post office remains part of the government.
The Postal Service has many assets that could be managed
more efficiently, if Congress got out of the way. In addition to its 32,000
post offices, it has 461 processing facilities, monopoly access to residential
mailboxes and an overfunded pension plan. These assets would attract bidders.
Consider, for example, that many processing facilities and post offices sit on
valuable real estate, and it may be smarter to sell many of them than to keep
them.
Arguments against
Three counterarguments caution against privatization, but
none of them is convincing. The first is that Congress could simply unshackle
the agency. Legislation is currently pending in both the Senate and the House
that would give Postal Service management additional flexibility. In an
increasingly polarized Congress, however, it is not clear if or when this
legislation will be enacted. And even if it were passed soon, it would probably
provide only temporary help.
The second argument against privatization is that only a
public-sector post office can provide universal service. Yet in sectors from
telecommunications to electricity, universal service does not require
government ownership. Privatization could come with the obligation to provide
universal service. FedEx Corp. and United Parcel Service Inc. already deliver
to almost all U.S.
addresses. For the hard-to-reach, unprofitable routes, a subsidy could be
provided. This would be more economical than the vast and opaque
cross-subsidies now used to ensure universal service.
The final argument involves the postal unions, and this one
is not so easy to dismiss. Labor compensation accounts for about 80 percent of
Postal Service costs — a much higher share than at FedEx or UPS. No one would
argue that, in the midst of a weak labor market, a large share of the Postal
Service workforce should immediately be shed. But it is also true that the
agency will one day need far fewer workers. Private ownership could facilitate
more generous buyout packages and other measures to ease the transition to a
leaner workforce.
The U.S. Postal Service has a long and storied history. Yet
it is now struggling because the world has changed and because congressional
sclerosis has prevented it from adapting to the new realities. The best way to
modernize it now is to move it out of the government.
Orszag is vice chairman of corporate and investment banking
at Citigroup Inc. and a former director of the Office of Management and Budget
in the Obama administration.
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