Can the federal government effectively run an organization set up to provide services and compete in a market? This is one of the big questions when it comes to the debate over public policy. Many have turned, somewhat ill-advisedly, to analogizing with the U.S. Postal Service.

The USPS is an organization set up to provide us with mail service. It's not, however, meant to compete within the market (it has a legal monopoly on the delivery of first-class mail) and it has been burdened with unnecessary regulations by the federal government.

The post office is, however, supposed to break even every year on its budget. For a few years now (and for the foreseeable future, due to the rise of internet communications), they have failed to meet budget requirements in an industry rapidly losing its relevance. And while the Post Office is proud to tout that it's not supported by direct taxpayer money, it is currently being deficit-financed.

The USPS may not be a great model to compare the proposed government option insurance plan to, but it's silly to try to defend the status quo business model of the USPS. But that's exactly what Tom Schaller of fivethirtyeight.com has done. Twice.

"The USPS is, after all, losing money right now--burdened as they are by hefty labor costs and massive pension obligations. But industries that rely upon the postal service to deliver their goods and solicitations are not complaining. In fact, as I noted, many are strong advocates of maintaining the USPS.

The idea that a private company would both deliver mail to every office and home six days a week, and collect it from the same plus thousands of drop boxes scattered across the nation-- all the while maintaining walk-up offices in every town--and still be able to deliver a first-class envelope to any address for a mere 44 cents (an amount that hasn't changed in real terms after 30 years) is simply an absurd expectation."

He's right - this is an absurd expectation! And what we have ended up with is a system where indirect subsidies - government debt - are financing an inefficient and supposed-to-be self-financing government service.

The fact that businesses and consumers are happy with the USPS is no reason to support the status quo. Of course big corporations love getting favorable service at a price well below market value. This doesn't make it a good program.

Surely, both Left and Right can agree that the USPS, as currently constituted, a mess. Progressives could argue that we are morally required to provide mail service to rural outposts that it wouldn't make financial sense to provide service to. But this would require repealing the 1971 requirement that the Postal Service be self-financing, or require a complete overhaul of the mail delivery pricing structure (and increased labor flexibility) so that high-volume mail areas subsidize low-traffic routes. Defending the status quo is useless even for those advocates of the current government mail monopoly.

[For conservative solutions to USPS troubles, just click here or go to cato.org and search "USPS." They make the many cases far more eloquently than possible here.]