Why postal “bankruptcy” doesn’t make sense

Dead Tree Edition and Courier Express and Postal Observer have recently discussed the idea of a USPS bankruptcy. While both make interesting points, I have a problem regarding the USPS’s current situation as similar to the case of a failing corporation.

In the first place, the USPS is not nearing insolvency due to operational or market conditions. The reason it might not have enough cash to pay any of its creditors next year is the PAEA trust fund obligation- plain and simple. The Treasury is sitting on $42.5 billion in USPS profits- that’s an undeniable fact. Congress created that problem, and only Congress can fix it.

The other issue I have with viewing the situation as a bankruptcy is the fact that creditor and debtor are one and the same- the US Government. The USPS has plenty of money to pay its suppliers and employees. The debt it can’t cover is owed to the US Government. The US Postal Service, contrary to what a lot of folks seem to think, is not a “quasi-governmental” entity, nor is it a company “owned” by the US Government. It is an integral part of the US Government. The trust fund “debt”, then, is owed by one agency of the US Government to another agency of the US Government. Both agencies are, in the end, owned by the American people. The concept that one agency can force another agency to “liquidate” assets that belong to the American people to satisfy a debt owed to the American people is bizarre.

The bottom line is that the US Postal Service financial “crisis” is a political construct, not a financial one. Politicians got us where we are today, and they need to come up with a way out.

Don’t Worry About Forever Stamps in Bankruptcy | Courier Express and Postal Observer.

Dead Tree Edition: Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS.

  • M. Jamison

    It serves the narrative of the USPS as a business entity (rather than as a government service) to use terms like bankruptcy, inappropriate as they may be. Maintaining this narrative thread is important since it leads to discussions of spinning off pieces of the postal enterprise into the private sector.
    Both Dead Tree and Alan Robinson of Courier Express seem captured by the idea of the privatization of the Postal service. It’s as if virtually all of the media and most of the policymakers have accepted the premise of the Postal Service as failed business model, rather than an essential public service compromised by Congressional mandates and bad management.