The folks who pick up and deliver your mail like to say that they view the people of the United States as their “stockholders.” But if you could have actually bought shares in the postal system, this might be the time to sell them.
The U.S. Postal Service is on track to earn $650 million this year. Those profits would come on top of $1.6 billion racked up last year and record net income of nearly $1.8 billion in 1995.
You would think that three years of $4 billion in combined earnings, with a legal monopoly to carry first-class mail, should have Wall Street drooling over the prospects of a socko equity issue.
When you add into the mix its big property holdings, held on the books at a much undervalued $25 billion, the idea of putting the Postal Service on the Big Board should be even more enticing.
But, in truth, the Postal Service isn’t a viable enterprise. Nor is it likely to ever be one.
“Our core problem is that some prominent people have yet to decide whether we are a business or a government service,” a key postal official confides.
For its part, Congress seems to have made up its mind: It keeps setting up legislative roadblocks to the long-term financial health of the service.
Take priority mail, the fastest growing and most profitable segment of the mail groups. Amazingly, the federal government has an exclusive deal with Federal Express to haul its own priority shipments.
Last year, by skimming the cream off the business, FedEx, the Postal Service’s nemesis, earned $308 million on operating revenues of $10.3 billion. The Postal Service, which had operating revenues of $56.4 billion in 1996, is barred by law from offering the kind of discounts that would have let it bid on the government contract.
An accountant who sizes up the postal books can tell at a glance that the service is insolvent. Keeping faith with a bureaucratic heritage, officials prefer to cite a current “net capital deficiency” of $2.6 billion.
Aside from real estate mortgages, the U.S. Treasury holds all of the service’s outstanding debt. Since the Treasury isn’t about to call those loans, the postal people aren’t about to declare bankruptcy.
Still, since the postmaster general left the Cabinet in 1971, the service has accumulated net losses of some $5.7 billion. Over the years, taxpayers have chipped in more than $3 billion to ease the flow of red ink - but it’s hardly been enough.
Now the postal folks want to raise the price of a first-class stamp by a penny while cutting the cost of bill payments by 2 cents. The hope is that the discounted 30-cent envelopes would stem the growth of electronic payments, which threaten to eat the service’s lunch.
If the Postal Service had been on the ball, FedEx and its thriving corporate siblings wouldn’t even exist: The service would have long ago seen the need for such priority services and pre-emptively claimed them as part of its own fiefdom.
But the mailers cannot stem the rising tide of electronic transfers and e-mail. Theirs is an endeavor whose hour will pass.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.