National Association of Letter Carriers

Postal Service to Cut Saturday Mail to Trim Costs

The ALEC-led death spiral for the USPS continues.  We wonder what will happen after UPS and FedEX get the USPS privatized and then decide that they are not going to deliver the mail to unprofitable routes.  Who will pick up the  slack?  Who else–WE THE TAXPAYERS!

Hey there USPS Management and Union Leaders:  get out there and fight for your survival!  Instead of death by a thousand cuts, go public with the information we have given you about the ALEC-Koch connections to the privatization efforts. http://www.vltp.net/aleckoch-cabal-pursuing-privatization-postal-service-ups-fedex/ Try out some righteous indignation on the public which is once again being manipulated to generate more profit for ALEC Corporate Members at the expense of the taxpayers – and your jobs.

WHERE ARE YOUR FELLOW MEMBERS OF ORGANIZED LABOR?  IF UNIONS DON’T STAND UP FOR EACH OTHER, ALEC-WRITTEN-LEGISLATION WILL SUCCEED AT ELIMINATING THE UNION MOVEMENT FOREVER.

HEY THERE–AFL-CIO, SEIU, AFSCME, IBEW AND ALL THE REST OF YOU UNIONS!  SUPPORT YOUR FELLOW UNION MEMBERS AND SUPPORT THE TAXPAYERS OF AMERICA.  FIGHT FOR YOUR SURVIVAL!  WHO ELSE IS GOING TO REPRESENT THE RIGHTS OF WORKERS?

Fight to survive or become history.
—The editors of www.vltp.net

WASHINGTON (AP) — Apparently trying an end-run around an unaccommodating Congress, the financially struggling U.S. Postal Service says it will stop delivering mail on Saturdays but continue to disburse packages six days a week.

In an announcement scheduled for later Wednesday, the service is expected to say the Saturday mail cutback would begin in August and could save $2 billion annually.
postmaster General Tom DonahoeFILE – In this Sept. 6, 2011 file photo Postmaster General Patrick Donahoe testifies on Capitol Hill in Washington. The U.S. Postal Service will stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion, the financially struggling agency says. (AP Photo/J. Scott Applewhite, File)The move accentuates one of the agency’s strong points — package delivery has increased by 14 percent since 2010, officials say, while the delivery of letters and other mail has declined with the increasing use of email and other Internet services.Under the new plan, mail would be delivered to homes and businesses only from Monday through Friday, but would still be delivered to post office boxes on Saturdays. Post offices now open on Saturdays would remain open on Saturdays.

Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages — and it repeatedly but unsuccessfully appealed to Congress to approve the move. Though an independent agency, the service gets no tax dollars for its day-to-day operations but is subject to congressional control.

It was not immediately clear how the service could eliminate Saturday mail without congressional approval.

But the agency clearly thinks it has a majority of the American public on its side regarding the change.

Material prepared for the Wednesday press conference by Patrick R. Donahoe, postmaster general and CEO, says Postal Service market research and other research has indicated that nearly 7 in 10 Americans support the switch to five-day delivery as a way for the Postal Service to reduce costs.

“The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America’s changing mailing habits,” Donahoe said in a statement prepared for the announcement. “We developed this approach by working with our customers to understand their delivery needs and by identifying creative ways to generate significant cost savings.”

But the president of the National Association of Letter Carriers, Fredric Rolando, said the end of Saturday mail delivery is “a disastrous idea that would have a profoundly negative effect on the Postal Service and on millions of customers,” particularly businesses, rural communities, the elderly, the disabled and others who depend on Saturday delivery for commerce and communication.

He said the maneuver by Donahoe to make the change “flouts the will of Congress, as expressed annually over the past 30 years in legislation that mandates six-day delivery.”

There was no immediate comment from lawmakers.

But others agreed the Postal Service had little choice but to try.

“If the Congress of the United States refuses to take action to save the U.S. Postal Service, then the Postal Service will have to take action on its own,” said corporate communications expert James S. O’Rourke, professor of management at the University of Notre Dame.

He said other action will be needed as well, such as shuttering smaller rural post offices and restructuring employee health care and pension costs.

“It’s unclear whether the USPS has the legislative authority to take such actions on its own, but the alternative is the status quo until it is completely cash starved,” O’Rourke said in a statement.

The Postal Service is making the announcement Wednesday, more than six months before the switch, to give residential and business customers time to plan and adjust, the statement said.

“The American public understands the financial challenges of the Postal Service and supports these steps as a responsible and reasonable approach to improving our financial situation,” Donahoe said. “The Postal Service has a responsibility to take the steps necessary to return to long-term financial stability and ensure the continued affordability of the U.S. Mail.”

He said the change would mean a combination of employee reassignment and attrition and is expected to achieve cost savings of approximately $2 billion annually when fully implemented.

The agency in November reported an annual loss of a record $15.9 billion for the last budget year and forecast more red ink in 2013, capping a tumultuous year in which it was forced to default on billions in retiree health benefit prepayments to avert bankruptcy.

The financial losses for the fiscal year ending Sept. 30 were more than triple the $5.1 billion loss in the previous year. Having reached its borrowing limit, the mail agency is operating with little cash on hand.

The agency’s biggest problem — and the majority of the red ink in 2012 — was not due to reduced mail flow but rather to mounting mandatory costs for future retiree health benefits, which made up $11.1 billion of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4 billion, lower than the previous year.

The health payments are a requirement imposed by Congress in 2006 that the post office set aside $55 billion in an account to cover future medical costs for retirees. The idea was to put $5.5 billion a year into the account for 10 years. That’s $5.5 billion the post office doesn’t have.

No other government agency is required to make such a payment for future medical benefits. Postal authorities wanted Congress to address the issue last year, but lawmakers finished their session without getting it done. So officials are moving ahead to accelerate their own plan for cost-cutting.

The Postal Service is in the midst of a major restructuring throughout its retail, delivery and mail processing operations. Since 2006, it has cut annual costs by about $15 billion, reduced the size of its career workforce by 193,000 or by 28 percent, and has consolidated more than 200 mail processing locations, officials say.

They say that while the change in the delivery schedule announced Wednesday is one of the actions needed to restore the financial health of the service, they still urgently need lawmakers to act. Officials say they continue to press for legislation that will give them greater flexibility to control costs and make new revenues.

SHARE


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This was written by PAULINE JELINEK  and posted at the Associated Press.  The original posting can be seen at http://bigstory.ap.org/article/postal-service-cut-saturday-mail-trim-costs

Saving the Post Office: Letter Carriers Consider Bringing Back Banking Services

On July 27, 2012, the National Association of Letter Carriers adopted a resolution at their national convention in Minneapolis to investigate the establishment of a postal banking system. The resolution noted that expanding postal services and developing new sources of revenue are important components of any effort to save the public post office and preserve living-wage jobs; that many countries have a long and successful history of postal banking, including Germany, France, Italy, Japan and the United States itself; and that postal banks could serve the nine million people who don’t have a bank account and the 21 million who use usurious check cashers, giving low-income people access to a safe banking system. “A USPS [United States Postal Service] bank would offer a ‘public option’ for banking,” concluded the resolution, “providing basic checking and savings – and no complex financial wheeling and dealing.”

What is bankrupting the USPS is not that it is inefficient. It has been self-funded throughout its history. But in 2006, Congress required it to prefund postal retiree health benefits for 75 years into the future, an onerous burden no other public or private company is required to carry. The USPS has evidently been targeted by a plutocratic Congress bent on destroying the most powerful unions and privatizing all public services, including education. Britain’s 150-year-old postal service is on the privatization chopping block for the same reason, and its postal workers have also vowed to fight. Adding banking services is an internationally tested and proven way to maintain post office solvency and profitability.

Serving an Underserved Market Without Going Broke

Many countries operate postal savings systems through their post offices, providing depositors without access to banks a safe, convenient way to save. Great Britain first offered this arrangement in 1861. It was wildly popular, attracting over 600,000 accounts and £8.2 million in deposits in its first five years. By 1927, there were twelve million accounts – one in four Britons -with £283 million on deposit.

Other postal banks followed. They were popular because they serviced a huge untapped market – the unbanked and underbanked. According to a Discussion Paper of the United Nations Department of Economic and Social Affairs:

The essential characteristic distinguishing postal financial services from the private banking sector is the obligation and capacity of the postal system to serve the entire spectrum of the national population, unlike conventional private banks which allocate their institutional resources to service the sectors of the population they deem most profitable.

Serving the unbanked and underbanked may sound like a losing proposition, but numerous precedents show that postal savings banks serving low-income and rural populations can be quite profitable. (See below.) In many countries, according to the UN paper, banking revenues are actually crucial to maintaining the profitability of their postal network. Letter delivery generates losses and often requires cross-subsidies from the post’s other activities in order to maintain its network. One effective solution has been to create or expand the role of postal financial services.

One reason public postal banks are profitable is that their costs are low: the infrastructure is already built and available, advertising costs are minimal and government-owned banks do not award their management extravagant bonuses or commissions that drain profits away. Rather, profits return to the government and the people.

Profits also return to the government in another way: money that comes out from under mattresses and gets deposited in savings accounts can be used to purchase government bonds. In Japan, for example, Japan Post Bank is the holder of fully one-fifth of the national debt. The government has its own captive government lender, servicing the debt at low interest rates without risking the vagaries of the international bond market. Fully 95 percent of Japan’s national debt is held domestically in one way or another. That helps explain how Japan can have the worst debt-to-gross-domestic-product ratio of any major country and still maintain its standing as the world’s largest creditor. If you owe the money to yourself, it’s not really a debt.

Some Examples of Successful Public Postal Banks

Kiwibank

New Zealand’s profitable postal bank had a return on equity of 11.7 percent in the second half of 2011, with net profits almost trebling. It is the only New Zealand bank able to compete with the big four Australian banks that dominate the New Zealand financial sector.

In fact, Kiwibank was set up for that purpose. When the New Zealand postal banks were instituted in 2002, it was not to save the post office, but to save New Zealand families and small businesses from big-bank predators. By 2001, Australian mega-banks controlled some 80 percent of New Zealand’s retail banking. Profits went abroad and were maximized by closing less profitable branches, especially in rural areas. The result was to place hardships on many New Zealand families and small businesses.

The New Zealand government decided to launch a state-owned bank that would compete with the Aussie banks. To keep costs low while still providing services in communities throughout New Zealand, the planning team opened bank branches in post offices, establishing Kiwibank as a subsidiary of the government-owned New Zealand Post.

Suddenly, New Zealanders had a choice in banking. In an early version of the “move your money” campaign, 500,000 customers transferred their deposits to public postal banks in Kiwibank’s first five years – this in a country of only four million people. Kiwibank consistently earns the nation’s highest customer satisfaction ratings, forcing the Australia-owned banks to improve their service in order to compete.

China‘s State-Owned Postal Savings Bureau

With the assistance of the People’s Bank of China (the central bank), China’s Postal Savings Bureau was re-established in 1986 after a 34-year lapse. As in New Zealand, savings deposits flooded in, showing an extraordinary growth rate of over 50 percent annually in the first half of the 1990s and over 24 percent annually in the second half. By 1998, postal savings accounted for 47 percent of China Post’s operating revenues; and 80 percent of China’s post offices provided postal savings services. The Postal Savings Bureau has served as a vital link in mobilizing income and profits from the private sector, providing credit that is available to finance local development. In 2007, the Postal Savings Bank of China was set up from the Postal Savings Bureau and established as a state-owned limited company, which continues to provide postal banking services.

Japan Post Bank 

By 2007, Japan Post was the largest holder of personal savings in the world, boasting combined assets for its savings bank and insurance arms of more than ¥380 trillion (US$3.2 trillion). It was also the largest employer in Japan. As in China, Japan Post recaptures and mobilizes income from the private sector, funding the government at low interest rates and protecting the nation’s sovereign debt from raids by foreign speculators.

Switzerland‘s Swiss Post

Postal financial services are by far the most profitable activity of Swiss Post, which suffers heavy losses from its parcel delivery and only marginal profits from letter delivery operations.

India‘s Post Office Savings Bank (POSB) 

POSB is India’s largest banking institution and its oldest, having been established in the latter half of the 19th century following the success of the postal savings bank system in England. Operated by the government of India, it provides small savings banking and financial services. The Department of Posts is now seeking to expand these services by obtaining a license for the creation of a full-fledged bank that would offer full lending and investing services.

Russia‘s PochtaBank

Russia, too, is seeking to expand its post office services. The head of the highly successful state-owned Sberbank has stepped down to take on the task of revitalizing the Russian post office and create a post office bank. PochtaBank will operate in the Russian Post’s 40,000 local post offices. The post office will function as a banking institution and compete on equal footing not only with private banks, but with Sberbank itself.

Brazil‘s ECT

Brazil instituted a postal banking system in 2002 on a public/private model with the national postal service (ECT), forming a partnership with the largest private bank in the country (Bradesco) to provide financial services at post offices. The current partnership is with Bank of Brazil. ECT (also known as Correios) is one of the largest state-owned companies in Latin America, with an international service network reaching more than 220 countries worldwide.

The US Postal Savings System

The now-defunct US Postal Savings System was also quite successful in its day. It was set up in 1911 to get money out of hiding, attract the savings of immigrants accustomed to saving at post offices in their native countries, provide safe depositories for people who had lost confidence in private banks and furnish depositories that had longer hours and were more convenient for working people than what private banks provided. The minimum deposit was $1 and the maximum was $2,500. The postal system paid two percent interest on deposits annually. It issued US Postal Savings Bonds in various denominations that paid annual interest, as well as Postal Savings Certificates and domestic money orders. Savings in the system spurted to $1.2 billion during the 1930s and jumped again during World War II, peaking in 1947 at almost $3.4 billion.

The US Postal Savings System was shut down in 1967, not because it was inefficient, but because it became unnecessary after the profitability of catering to the unbanked and underbanked became apparent to the private financial sector. Private banks then captured the market, raising their interest rates and offering the same governmental guarantees that the Postal Savings System had.

Time to Revive the US Postal Savings System? 

Today, the market of the unbanked and underbanked has grown again, including about one in four US households, according to a 2009 FDIC survey. Without access to conventional financial services, people turn to an alternative banking market of bill pay, prepaid debit cards and check cashing services, as well as payday loans. The unbanked pay excessive fees for basic financial services, are susceptible to high-cost predatory lenders  and have trouble buying a home and other assets because they have little or no credit history. On average, a payday borrower pays back $800 for a $300 loan, with $500 purely going toward interest. Low-income adults in the US spend over five billion dollars paying off fees and debt associated with predatory loans every year. People with access to banks are better able to resist these services and break the cycle of poverty.

Another underserviced market is the rural population. In May, a move to shutter 3,700 low-revenue post offices was halted only by months of dissent from rural states and their lawmakers, who said the cost cutting would hurt their communities. Banking services are also more limited for farmers following the 2008 financial crisis. With shrinking resources for obtaining credit, family farmers and ranchers are finding it increasingly difficult to stay in their homes.

Postal banking could be a win-win in these circumstances, providing jobs and income for the post office along with safe and inexpensive banking services for underserviced populations. Countries such as Russia and India are exploring full-fledged lending services through their post offices; but if lending to the underbanked seems too risky, a US postal bank could follow the lead of Japan Post and use the credit generated from its deposits to buy safe and liquid government bonds. That could still make the bank a win-win-win, providing income for the post office, safe and inexpensive depository and checking services for the underbanked and a reliable source of public funding for the government.

Sunday, 12 August 2012 | by Ellen Brown

Copyright, Truthout.org.  Reprinted with permission.
http://truth-out.org/news/item/10812-saving-the-post-office-letter-carriers-consider-bringing-back-banking-services

 

 

Postal Service Set to Default on Billions in Health Fund Payments

The Postal Service, faced with continuing financial losses because of a drop in mail volume, expects to default for the first time on its annual payment for future retiree health benefits.

The $5.5 billion payment, which was deferred from the 2011 fiscal year, is due Aug. 1. The Postal Service is also scheduled to make a $5.6 billion payment for 2012 in September. A spokesman for the agency said that barring intervention from Congress, it would default on both payments.

“We are simply not capable of making either of these payments to the U.S. Treasury, in part or in full, while continuing to meet our other legal obligations, including our obligation to provide universal service to the American people,” said the spokesman, Dave Partenheimer.

Missing the health care payment will not cause immediate disaster, nor will it affect current retiree benefits. The Postal Service will still be able to pay its employees and buy fuel for its trucks to deliver mail on time, postal officials said.

To read more about this latest problem to beset the USPS and the reasons for it, please click here