Barack Obama tried to convince us that a public option would not compete unfairly against private insurers in the marketplace. Oh, if government subsidized a public option, it would certainly compete unfairly, but Obama assured us that the public option would need no such subsidies.  In fact, Obama argued, it would look a lot like the Post Office:

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.)

Guess who’s getting a big federal bailout from Democrats in Congress?

Democrats moved Thursday to give special relief to the financially strapped Postal Service, which would be allowed to defer $4 billion in payments due at the end of this month to cover retirement benefits for its employees.

Republicans protested the bailout but made no significant effort to block the provision, which has now been attached to a stop-gap spending bill slated to come before the House and Senate in the next week.

Proponents of the language argued that the House has previously endorsed equivalent relief for the Postal Service, which faces a $5.4 billion payment to the retirement fund at the end of this month. House and Senate Appropriations Committee staff said the language now would reduce that payment to $1.4 billion, helping the Postal Service deal with its cash problems but also exposing the government at least temporarily to the $4 billion difference.

Not only have Democrats offered a huge bailout to the Post Office, they have attached it to their continuing resolution that will fund the government after the end of the month.  That makes it almost impossible to defeat, as Republicans would have to shut down the government over the issue — and with health care and cap-and-trade still on the table, they will want to save their political capital to block the trillions in new spending rather than the billions.  The Senate GOP can’t block it anyway, as budget bills are not subject to filibusters.

Since Obama himself offered the USPS as the model of the public option, we can point to this as the inevitable result of a government program in a private market.  When it fails or runs over its revenue, the government will inevitably act to subsidize it.  The public option will be no different at all in this regard.