How is that Post Office comparison working now?

posted at 11:38 am on August 18, 2009 by Ed Morrissey

Last week, Barack Obama tried to reassure people that the government could compete with the free market in health care by using the post office as an example:

Now, the only thing that I have said is that having a public option in that menu would provide competition for insurance companies to keep them honest.

Now, I recognize, though, you make a legitimate — you raise a legitimate concern. People say, well, how can a private company compete against the government? And my answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining — meaning taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do — then I think private insurers should be able to compete. They do it all the time. (Applause.)

I mean, if you think about — if you think about it, UPS and FedEx are doing just fine, right? No, they are. It’s the Post Office that’s always having problems. (Laughter.)

If Obama hoped to assuage fears by comparing ObamaCare to the US Post Office, he may have been more right than he realized. In fact, the US Post Office is careening towards bankruptcy at an increasing clip, and may collapse soon if it doesn’t get significantly changed. The factors driving the bankruptcy are practically a prediction of what will happen to ObamaCare after its implementation:

The U.S. Government Accountability Office (GAO) recently announced that the U.S. Postal Service (USPS) is at risk of financial insolvency.

The post office made GAO’s list of government operations that are considered costly and “high risk.” GAO submits its High Risk Series report to Congress every two years…. The last year USPS reported income from its operations was in 2006. Beginning in 2007, its fortunes soured and it began to report significant losses: $5 billion at the end of fiscal year (FY) 2007 and $3 billion in FY 2008, according to its annual financial report. On June 30, 2009, the third quarter of its fiscal year, the USPS reported a staggering $4.7 billion net loss.

What factors did the GAO highlight?

The culprit is a combination of economic realities, increased reliance on e-mail, and the USPS’s inability to address problems effectively and efficiently, according to the GAO.

“USPS urgently needs to restructure to address its current and long-term financial viability. USPS has not been able to cut costs fast enough to offset the accelerated decline in mail volume and revenue—particularly costs related to its workforce, retail and processing networks, and delivery services,” read the GAO’s High Risk Series release.

The USPS responded by blaming the nature of bureaucracies:

“We are subject to Congressional oversight, regulation by other government agencies, and also oversight by various other organizations and the public,” USPS said in their annual report. “If we cannot successfully address their various, and sometimes competing, concerns, we may be subject to greater regulation, which could increase our costs or otherwise place additional burdens on our operations,” USPS warned regulators in the annual report.

Sound familiar?  The government has created a regulatory system for the USPS that breeds inefficiency, stagnation, and waste.  The competing interests of Congress and multiple levels of regulatory oversight creates an often-contradictory burden that increases cost and damages consumer satisfaction.  Top that off with a pension/health fund that Congress mandated in 2006, and you have a recipe for disaster.  It’s a recipe that Barack Obama hails as his model for ObamaCare, and in that, he’s more right than he knows.

So what will Congress do to address the USPS crisis?  Privatization has gathered momentum, as Congress may want to shed itself of the entire mess.  If so, we will have the unusual juxtaposition of the federal government washing its hands of a service it has run since the founding of the republic, while simultaneously nationalizing what has always been a private enterprise: health care.  It sounds as if this administration really hasn’t paid any attention at all to the lessons of the US Postal Service, and perhaps that’s why Obama issued that tone-deaf metaphor last week.

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UPS – Q2 – $1.1 billion earnings – 426,000 employees
FedEx – Q2 – $1 billion earnings – 212,000 employees
USPS – near bankruptcy per post master general – 684,762 employees.

hmmm and we now want to do a government healthcare biz….

highninside on August 18, 2009 at 7:02 PM

highninside you dope, your comparing apples and oranges and saying they are the same b/c hey are fruit. USPS delivers more mail in one day than those two combined yearly. USPS also delivers places those two will not even tread. Try to get Fedex of UPS to deliver a package to middle of nowhere Iowa at an descent price, USPS does it daily.

jero_jones on August 18, 2009 at 8:17 PM

I love how in that simple analogy – Obama proved the point against any government intervention in anything.

ChalkPerson on August 18, 2009 at 8:18 PM

USPS must deliver flyers, grocery store ads & numerous other “junk mail” that UPS and FED-EX don’t. Whether they could be profitable without congressional interference and mandates we’ll probably never know. Don’t forget, UPS and FED-EX walked away with the gravy.

jero-jones nails it. The USPS exists to provide a service, not make a profit. Some government efforts are not spawn of the devil.

JackOkie on August 18, 2009 at 8:28 PM

Pros about the USPS: It’s regular, its reliable, stamps are cool

Cons about the USPS: It has a relatively singular function–receive and deliver mail A to B, B to A. It is not efficient, nor flexible, nor profitable, and much effort is expended in distributing junk mail.

Healthcare like the USPS: It’ll be regular, reliable. However, regularity isn’t a function you seek out of health care–you need it to function irregularly–like on Friday night and Sunday morning. Moreover, you need it to be flexible, since your back pain or chest pain ain’t like the next guys and you’d appreciate some flexibility into other competing diagnoses and taking history into account. The thing that Obama wants the public to learn is that the healthcare you’re missing out on under Obamacare–never existed, so you’ll never miss what you never knew about.

ted c on August 18, 2009 at 8:36 PM


American Express is paying customers $300 to close their accounts, thus reducing their market share.

David2.0 on August 18, 2009 at 12:54 PM

Unlike the USPS, AmEx doesn’t see decreasing market share as a problem that needs to be solved…they see it as a solution to a totally unrelated problem.

James on August 18, 2009 at 10:39 PM

Please have more town hall meetings, you idiot.

willy v on August 19, 2009 at 12:51 AM

The only way the USPS even survives is that they’ve been legislated a monopoly on 1st-class mail, and despite this they’re going broke; and if it weren’t for junk mail, they’d already would be.

Joe C. on August 19, 2009 at 9:27 AM

Hey Jones – don’t go postal man. The gross inefficiencies of usps gave birth to UPS/FedEx my friend. Not to mention the USPS has offered for ages the same products offered by these two competitors to a dismal failure (eg guaranteed overnight etc). The USPS, were it private, could and would be profitable and NOT headed for insolvency. Get your head out and pay attention to the point of the comps. Mail delivery timing is pitiful from USPS. Amtrak trains are dismal and stink. Medicare is broke as is social security. Are you listening? Do you NOW see the point…

highninside on August 19, 2009 at 4:17 PM