es exceeded revenues” by billions of dollars. “Although postage rates have increased significantly, labor and fuel costs have risen even faster. . . Rising payroll costs have been primarily responsible for this situation.”
“Because of such serious financial problems and the need to economize wherever possible,” the General Accounting Office (GAO) has conducted a review “to reassess the pros and cons of closing small post offices.” The Postal Service has also said “that it would be helpful if the [Postal Reorganization] act were amended to specifically authorize the Service to close small offices if the alternative mail service would be at least as good.”
Sound familiar? It should. It’s about all we’ve been hearing for the past few months, and it’s become the mantra of the Postmaster General, the USPS managers trying to explain to communities why their post office is going to close, and legislators looking to make it easier to close post offices.
The thing is, all those quotations are not from today’s news. They come from a GAO report prepared by the Comptroller General in the year 1975.
The urgent push to close post offices to prevent the Postal Service from going bankrupt is nothing new. The Postal Service is simply using the latest deficit “crisis” — an accounting problem caused primarily by the over-funding of retirement benefits and a slump in commercial mail caused by the recession — to do something some people have wanted to do for decades.
The 1975 report is called “$100 Million Could Be Saved Annually In Postal Operations In Rural America Without Affecting The Quality Of Service.” The opening sentence reads: “The Postal Service has been faced with critical financial problems in recent years. In fiscal year 1974, expenses exceeded revenues by about $2.3 billion.” The report’s recommendation? Close 12,000 small rural post offices and save $100 million.
The parallels between the 1975 report and our current situation are even more striking if you figure for inflation and convert those 1975 numbers to 2011 dollars. The 1974 deficit of $2.3 billion would come to $9.7 billion in today’s dollars — over a billion dollars more than the $8.5 billion the Postal Service lost in fiscal year 2010. Yet somehow the Postal Service survived without closing all those post offices.
Similarly, in both 1975 and 2011, the estimated savings that would have come from closing thousands of post offices is minute. In 1975, closing 12,000 post offices would have saved $100 million — less than 4% of the deficit. In 2011, closing the 3,652 post offices of the Postal Service’s Retail Access Optimization initiative might save $200 million — 2.3% of the 2010 deficit.
There are still more parallels. In June 1975, when the report came out, the country was just coming out of a recession that had been caused by the quadrupling of oil prices by OPEC (hence the refernce to the rise in fuel prices as one cause of the Postal Service deficit) and by the 1973-74 stock market crash. The recession had caused a dramatic drop in mail volume, and there were concerns that the volume might never return.
There were also fears, as the GAO said in a second report in 1976, that "electronic funds transfer is increasing in usage and the use of computer terminals for direct exchange of information is on the upswing," both of which "might affect demand for traditional postal services." How many times over the past year have we heard the same thing said about online bill paying and email causing a permanent "electronic divergence" from the mail?
One last parallel: The 1975 GAO report suggests that one way to "remedy" the loss of a post office for a community would be to set up a "contractor-operated community post office" (CPO) or a "rural branch . . . operated under contract by persons who are not postal employees." Maybe this is where Postmaster General Donahoe got the concept for replacing thousands of rural post offices with contractor-operated "Village Post Offices" (VPO).
So why is history repeating itself this way? Why is the Postal Service still trying to close pos