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<blockquote data-quote="worldwide" data-source="post: 2165823" data-attributes="member: 2193"><p>Full disclosure - the Newsweek article you posted the link to is an opinion piece from Fredric Roland, president of the National Association of Letter Carriers, so it may not be the most unbiased piece of writing...</p><p></p><p>One of the comments someone posted spells out very nicely all the benefits the USPS receives (see below). Fredric complains that it's a "unique and unfair burden" that the USPS must pre-fund its retiree health benefits. Guess what, UPS and FedEx equally complain that its unique and unfair that their primary competition is a quasi-government entity that gets all kinds of "perks" that no private company like UPS and FedEx can get. What other private sector firms have a quasi-government entity as their main competitor with all the perks they enjoy?</p><p></p><p>"But as Robert Shapiro—former Treasury undersecretary and chairman of the economic consultancy Sonecon—points out in a new analysis, American taxpayers subsidize the USPS at a rate that surpasses the costs associated with any Congressional mandate. He estimates that, all told, the subsidies and legal monopolies that Congress bestows upon the post office is worth $18 billion annually. These include:</p><p></p><p>1. Laws that bar any other shipping service from delivering mail and packages directly to residential and business mailboxes. Shapiro estimates that this gives the Post Office a $14 billion annual boost, more than three times what the Postal Regulatory Commission estimates it to be. Shapiro argues that the PRC’s analysis doesn’t take into account the productivity gains that the Post Office would be forced to make if it really had to compete for mailbox delivery. He points out that productivity at USPS has only grown by 0.7% per year versus 2.5% for its competition.</p><p></p><p>2. Tax breaks. The Post Office is exempt from state and local property and real estate taxes, along with other burdens like tolls, vehicle registration fees, and parking tickets. These exemptions save the USPS $2.18 billion per year.</p><p></p><p>3. Cheap borrowing. The Postal Service, writes Shapiro, “can borrow from the U.S. Treasury through the Federal Financing Bank, at highly-subsidized interest rates.” It currently borrows the legal limit of $15.2 billion at a rate of 1.2%. Without this access, it would be paying somewhere between $415 million and $490 million per year more in interest.</p><p></p><p>4. Finally, Shapiro points out that the USPS pays its workers salaries and benefits far above the rates paid to similar workers in the private sector. Labor accounted for 78% of the organization’s costs in 2014, “with about 89% of those costs involving employees represented by collective bargaining.” These higher labor costs, plus the absence of a need to innovate due to government-granted monopolies, has freed the USPS from $20 billion in labor and productivity costs per year, Shapiro estimates. “While we do not technically count this as a subsidy,” he writes, it represents an economic burden on others arising directly from USPS’s monopoly position.” Postage, for instance, would likely be cheaper for everyone if the organization were subject to the same competitive pressures as private firms.</p><p></p><p>It’s remarkable that the United States, which has a reputation for being more free market-oriented than other rich nations, maintains this government-mandated monopoly. Over the past several decades, the process of European integration led to the deregulation and privatization of European postal monopolies, with generally good results.</p><p></p><p>The Post Office employs 618,000 people—more than any civilian employer besides Wal Mart. Given the pay disparities between the Post Office and private employers, these people would be highly motivated to block any significant change to the current system."</p><p></p><p>And don't forget that the USPS does not have to pay any parking tickets while UPS and FedEx pay tens of millions of dollars each year. Perhaps the biggest perk they have is a 1st class mail monopoly. No one else is allowed to deliver 1st class mail and the USPS uses that monopoly to cross fund their parcel operations to keep prices much lower than FedEx and UPS could offer.</p></blockquote><p></p>
[QUOTE="worldwide, post: 2165823, member: 2193"] Full disclosure - the Newsweek article you posted the link to is an opinion piece from Fredric Roland, president of the National Association of Letter Carriers, so it may not be the most unbiased piece of writing... One of the comments someone posted spells out very nicely all the benefits the USPS receives (see below). Fredric complains that it's a "unique and unfair burden" that the USPS must pre-fund its retiree health benefits. Guess what, UPS and FedEx equally complain that its unique and unfair that their primary competition is a quasi-government entity that gets all kinds of "perks" that no private company like UPS and FedEx can get. What other private sector firms have a quasi-government entity as their main competitor with all the perks they enjoy? "But as Robert Shapiro—former Treasury undersecretary and chairman of the economic consultancy Sonecon—points out in a new analysis, American taxpayers subsidize the USPS at a rate that surpasses the costs associated with any Congressional mandate. He estimates that, all told, the subsidies and legal monopolies that Congress bestows upon the post office is worth $18 billion annually. These include: 1. Laws that bar any other shipping service from delivering mail and packages directly to residential and business mailboxes. Shapiro estimates that this gives the Post Office a $14 billion annual boost, more than three times what the Postal Regulatory Commission estimates it to be. Shapiro argues that the PRC’s analysis doesn’t take into account the productivity gains that the Post Office would be forced to make if it really had to compete for mailbox delivery. He points out that productivity at USPS has only grown by 0.7% per year versus 2.5% for its competition. 2. Tax breaks. The Post Office is exempt from state and local property and real estate taxes, along with other burdens like tolls, vehicle registration fees, and parking tickets. These exemptions save the USPS $2.18 billion per year. 3. Cheap borrowing. The Postal Service, writes Shapiro, “can borrow from the U.S. Treasury through the Federal Financing Bank, at highly-subsidized interest rates.” It currently borrows the legal limit of $15.2 billion at a rate of 1.2%. Without this access, it would be paying somewhere between $415 million and $490 million per year more in interest. 4. Finally, Shapiro points out that the USPS pays its workers salaries and benefits far above the rates paid to similar workers in the private sector. Labor accounted for 78% of the organization’s costs in 2014, “with about 89% of those costs involving employees represented by collective bargaining.” These higher labor costs, plus the absence of a need to innovate due to government-granted monopolies, has freed the USPS from $20 billion in labor and productivity costs per year, Shapiro estimates. “While we do not technically count this as a subsidy,” he writes, it represents an economic burden on others arising directly from USPS’s monopoly position.” Postage, for instance, would likely be cheaper for everyone if the organization were subject to the same competitive pressures as private firms. It’s remarkable that the United States, which has a reputation for being more free market-oriented than other rich nations, maintains this government-mandated monopoly. Over the past several decades, the process of European integration led to the deregulation and privatization of European postal monopolies, with generally good results. The Post Office employs 618,000 people—more than any civilian employer besides Wal Mart. Given the pay disparities between the Post Office and private employers, these people would be highly motivated to block any significant change to the current system." And don't forget that the USPS does not have to pay any parking tickets while UPS and FedEx pay tens of millions of dollars each year. Perhaps the biggest perk they have is a 1st class mail monopoly. No one else is allowed to deliver 1st class mail and the USPS uses that monopoly to cross fund their parcel operations to keep prices much lower than FedEx and UPS could offer. [/QUOTE]
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