Back when Barack Obama was pushing for a public option in the new national healthcare system, he raised eyebrows with an out-of-nowhere remark about the U.S. Postal Service.
It happened last August at a town hall in Colorado. Obama claimed Americans shouldn't be afraid of a government insurance company -- the public option -- competing against private insurers, because even though the government has vastly more resources than any individual company, "You've got a lot of private companies who do very well competing against the government -- UPS and FedEx are doing a lot better than the post office."
Obama apparently liked the point, because he made it again at another town hall around the same time. "Private insurers should be able to compete," he said Aug. 11 in New Hampshire. "They do it all the time. I mean, if you think about it, UPS and FedEx are doing just fine, right? It's the post office that's always having problems."
It was a jarring moment. Here, Obama was trying to promote a huge expansion of government involvement in the health system, and he pointed to a sprawling, unresponsive and insanely expensive government bureaucracy. (It's also one that nearly every American knows from firsthand experience.) Not exactly the best case for government effectiveness.
Obama's words are coming back now, with news that the U.S. Postal Service is in even more of a mess than we thought. Without serious reform, it's set to lose $7 billion this year and $238 billion over the next 10 years, and a new report from the Government Accountability Office says the post office's business model is "not viable" given current business conditions. The report makes the post office sound like a government version of General Motors, if General Motors itself weren't already a government version of General Motors.
Demand for snail mail has been falling in recent years -- the GAO notes that first-class mail volume has declined 19 percent since its peak in 2001 -- and though the post office has cut some staff, it hasn't done nearly enough to keep up. The post office is supposed to pay for itself, but in recent years has been covering its losses by borrowing from the Treasury. But now, GAO notes, the post office "is nearing its $15 billion borrowing limit with the U.S. Treasury and has unfunded pension and retiree health obligations and other liabilities of about $90 billion."
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