Time for the Postal Service to Enter the 21st Century

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U.S. Postal Service (USPS) boosters like Sen. Elizabeth Warren (D-MA) and Rep. Gerry Connolly (D-VA) are calling for a taxpayer-funded bailout of the agency of at least $25 billion and possibly as much as $89 billion. Maybe they forgot that, for years, many post office defenders claimed the service, whatever its other problems, was at least not a burden on taxpayers. Today’s specter of a bailout signals it is time to start thinking about privatizing the mail for real.

The U.S. Postal Service is already a quasi-private business. It has, technically, supported itself exclusively for several decades now through the sale of its own products and services, like stamps or shipping packages. Contrary to some widely-held misconceptions, taxpayers don’t directly subsidize it, though certainly the service is subsidized in other ways, such as not paying property taxes or other business taxes.

Now we’re looking at subsidies that are direct. The lawmakers want the bailout because the COVID-19 virus has caused traditional first-class mail volume to collapse, undermining the service’s already fragile financial structure. It is unlikely that any bailout will be a one-time thing, though.

Traditional first-class mail volume was declining years even before the outbreak, having fallen 41 percent since 2007, especially in the age of paperless billing and statements. The virus is certain to accelerate this downward trend as the dwindling number of people who still used first-class find alternatives. Mail volume is unlikely to rebound to its prior levels.

In short, the USPS was on a financially unsustainable path already and the virus has been pushed it further down that road. Any bailout supporter should acknowledge this will need to be done on a regular basis, because without fundamental reform, further bailouts will be needed.

Enter: privatization. Fears that this will undermine the ability of communities to receive mail are drastically overblown. If the current crisis has taught us anything, it is that the country is moving in that direction anyway. It is time the USPS enters the 21st century.