Mix-Up at the Times: Editorial Ends Up as Front-Page Lead

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Leave it to the New York Times to ignore the story on the post office for months, and then to put out a front-page piece that gets most of the story wrong.  Actually, the piece is fine, but it’s in the wrong part of the paper — it belongs on the Op-Ed page.  It’s not news.  It’s rife with opinion, slant, and misinformation, and its viewpoint is not too far from that of Darrell Issa.

Over the past six months, the Times has published one story about the bills before Congress (July 21), a really lovely piece about a cute post office closing (August 16), a short editorial a few days ago (Aug. 29), and that’s about it.

The August editorial repeated the usual talking points from the Postal Service.  It was wrong about why the Postal Service is having problems, and it presented the issues in a slanted way, but it was an editorial, and the Times is entitled to its opinion.  But yesterday’s piece appeared as front-page news (for a while, it was even the lead), and it sounds like it was written by the same editorial staff that wrote the Op-Ed piece.  It doesn’t help to publish such “news” just as the Senate Homeland Security Committee is about to hold an “emergency hearing” on Tuesday.

The problems start with the headline, “In E-Mail Age, Postal Service Struggles to Avoid a Default.”  The thesis is in the title — it’s the shift to e-mail that dooms the Postal Service.  The article reiterates this theme several times: ‘As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.”  And again a few paragraphs later: “The causes of the crisis are well known and immensely difficult to overcome.  Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available.”

Of course e-mail has put a dent in the Postal Service’s revenues, but not as much as the Times and the Postmaster General would have us believe.  When the Postal Service requested an exigent rate increase last year, it told the Postal Regulatory Commission that according to its estimates, the decline in revenues suffered over the past couple of years were due two-thirds to the recession, and one-third to “electronic divergence.”

Even that probably over-estimates the impact of the Internet.  If you look at the USPS revenues (see page 3 of this CRS report) over the past seven years, the Postal Service has suffered hardly any decline at all — revenues were about $70 billion in 2004 and $67 billion in 2010.  There was a big rise from 2004 to 2008 and then a big drop from after that.  Did people stop using the Internet when the revenues were going up and only start doing e-mail in 2008?  The rise and fall in revenues is obviously tied to the economic cycle, not the Internet.

But that doesn’t suit the argument the Times piece is trying to make.  It wants people to think that the revenue decline is permanent, and recessions aren’t permanent (at least they’re not supposed to be, but that’s a different story).  So the Times, like the leaders of the Postal Service, blames the “digital revolution” and declares an “emergency” requiring drastic cuts to the workforce, benefits, and post offices, as well as removing the no layoff clause from the union contracts.

These cuts and weakening unions are the real goal, and the rest is just a cooked-up rationale.  While it’s a good idea to trim during a recession, you don’t close down half your post offices and get rid of a third of the workforce.  The people who want to dismantle the Postal Service — and that includes the Postmaster General — have been playing this game for a long time.  For example, check out this discussion of a 1975 GAO report advocating the closing of 12,000 post offices because “electronic funds transfer is increasing in usage and the use of computer terminals for direct exchange of information is on the upswing.”

The Times article also focuses only on the decline in mail volume, not actual revenue, which makes the picture look worse.  Volume declines in the past have been offset by rate increases, so the volume decline looks much steeper than the revenue decline.  The Postal Service could be pursuing a rate increase now to help with its cash flow problem, yet it was just a few weeks ago that the Postal Service pulled its request for an “exigent rate increase” (i.e., one that goes beyond the rate of inflation) because the Postmaster General didn’t want to anger the mail industry — his big “stakeholders,” for whom a small increase means less profit.

The Times repeats the USPS press release saying that the Postal Service wants to layoff 120,000 workers and cut another 100,000 by attrition.  But “attrition” is just a nice word for forcing people to quit because you’ve consolidated their processing plant with one that’s a two-hour commute away.  (The article doesn’t mention that the Postal Service wants to close 300 of its 500 large processing facilities.)  And the job numbers also disguise the fact that the Postal Service wants to reduce its workforce of career employees by nearly half and replace a large portion with contract workers — which is why, with all the talk of imminent layoffs, the Postal Service is actually hiring a lot of contract workers right now.

The way the Times tells the story, the problem is really labor: “Decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs.”  And just to emphasize the point: “Postal workers also receive more generous health benefits than most other federal employees.”

So it’s all the unions’ fault.  They have succeeded in getting too sweet a deal for the workers, and now the workers are going to have to suck it up and go along with benefit cuts and huge layoffs.  The attack on workers couldn’t be more obvious.

The Times proceeds: “Meanwhile, the agency has had a tough time cutting its costs to match the revenue drop, with a history of labor contracts offering good health and pension benefits, underused post offices, and laws that restrict its ability to make basic business decisions, like reducing the frequency of deliveries.”

Again, it’s labor’s fault (count how many times that theme comes up) plus the laws that make it tough for the Postal Service to make “basic business decisions.”  That’s the usual mantra.  The Postal Service is supposed to be operating “like a business,” so it has to be able to trim its money-losers, as if the Postal Service were a supermarket chain that wants to shut down stores that aren’t bringing in enough profit.

But a post office is a not grocery store.  It’s part of a complex infrastructure that belongs to the American people.  That’s obviously too radical for the Times to handle, so let’s just focus on what the Times is saying when it states the Postal Service should be able to close “underused offices.”  What exactly does that mean?  How do you measure how much a post office is “used” or “underused”?

Aside from the fact that a post office is “used” by a community in many ways that can’t be measured in dollars and cents, consider how the Postal Service does its accounting.   A post office only gets credit for how much money it brings in, not how much mail passes through and gets delivered.  So if a big bulk mail company brings a mound of catalogs to a large urban post office, that facility gets all the credit in the revenue column, even though it will take thousands of post offices to get those catalogs delivered.  The way the Postal Service does its books, 80% to 90% of post offices are “underused.”  And the catalog company is actually subsidized by the people who buy stamps at that “underused” post office because the cost of delivering catalogs isn’t covered by how much the Postal Service charges.

The Times article also doesn’t mention that closing “underused” post offices won’t do a bit of good to help solve the Postal Service’s problems.  The Postal Service says closing 3,650 post offices could save $200 million.  But that’s just 2% of the projected $9 billion deficit for 2011.

The Times might have asked why the Postal Service would be willing to provoke so much public opposition to its plan to close post office when the cost savings are so minimal, but that might require asking some complex questions.  The Postal Service doesn’t want to close post offices to save money.  It wants to close them because it doesn’t want people to be attached to actual concrete places and to care about their communities.  That’s just not good business for global capital, which likes to keep things liquid and mobile.

The Times goes on to say, “The postal service has the legal authority to close facilities, although community opposition can make the process difficult. To placate critics and cut costs, officials say they would seek to run some postal operations out of stores like Wal-Mart or to share space with other government offices.”

Well, yes, the Postal Service has the authority to close a particular post office, but when it comes to closing thousands, that’s a different matter.  That’s why the Postal Service is required to go to the Postal Regulatory Commission for an Advisory Opinion on the matter. In fact, the Postal Service may or may not have the legal authority to close thousands of post offices.  Title 39 and the Postal Accountability and Enhancement Act (PAEA) contain passages that can be interpreted as both giving the Postal Service authority and as limiting that authority.   The PRC will be weighing in on the issue in October.  But not a word about that in the article.

And what’s this about “placating critics” by running postal operations out of a Wal-Mart.  The critics of post office closings are not placated by such proposals.  They are outraged.  And why?  (1) A postal counter in a Wal-Mart or a convenience store offers very few of the services one can get at a real post office.  (2) The post office is an important place in thousands of communities, it’s often in a location people can walk to, it’s a social and economic hub, and it’s a source of pride and identity.  (3) Replacing post offices with Wal-Mart counters is a form of privatization and amounts to stealing the post office from the people of this country.

After a few decent paragraphs with quotes from Senator Susan Collins of Maine about why cutting Saturday delivery is a bad idea and from Cliff Guffey of the APWU about the illegality of what the Postal Service is trying to do, the Times piece finally gets around to the real cause of the crisis that it is helping to manufacture — “recovering around $60 billion that some actuaries say the agency has overpaid into two pension funds.”  And then the Times says this: “Although the Obama administration is working closely with the senators to find a solution, it has signaled discomfort with the pension proposals, questioning whether the postal service really overpaid.”

“Some actuaries”?  “Signaled discomfort”?  “Questioning whether the postal service really overpaid”?  This is what passes for objective journalism at the Times?  The article makes it sound as if it’s just a few screwball accountants who’ve come up with the overpayment explanation.  But this is one issue on which all the parties agree — the General Accounting Office, the Office of Personnel Management, the unions, the postmasters associations, the Postal Regulatory Commission, and the leaders of the Postal Service.  And those “actuaries”?  Check out the Segal Report and the report by the USPS Office of Inspector General, this piece for a bit of the accounting background, and for another take on the PAEA  prefunding issue, this piece in today’s Op-EdNews.com.

As a recent CRS report observed, “The effects of the PAEA’s mandatory payments to the Postal Service Health Benefits Fund on the USPS’s profitability were considerable. This may be illustrated with a hypothetical—if the USPS did not have to pay into this fund each year, it would have experienced no operating losses until FY2009.”  Even the Postmaster General has said, in an interview on the Kudlow Report in June, that if the Postal Service didn’t need to make these payments, it would be doing just fine.

And who in the Obama administration questions whether the Postal Service really overpaid?  Why not name the person who sent out this “signal”? If Obama is questioning the validity of the overpayments, he ought to come out and say so.  I’m sure that would please Darrel Issa, one of the only people who denies that the overpayments are the problerm.

In fact, says the Times, Issa thinks the “pension proposals would amount to an unjustifiable bailout that would not solve the agency’s underlying problems.”  You’re going to hear “bailout” a lot more over the coming weeks.  It’s just to get people angry so Issa and others can push through legislation that will make it easier to close post offices and lay off workers. The Postal Service is not asking for a bailout — it just wants the messed-up accounting on its retirement programs corrected.

Talk about biting the hand that feeds.  How many copies of the New York Times are delivered by the Postal Service?  And doesn’t the Times get a special periodicals discount rate — a discount that means it costs more to deliver the newspapers than the company pays the USPS in postage?  (See pp. 89-94 of the PRC’s Annual Compliance Determination Report for 2010.)

So here we have a front-page article in the New York Times attacking the workers who are delivering its newspapers at a discount rate.   It wouldn’t be surprising if a few copies of the Times went missing from mailboxes this week.  But who’d notice?  Isn’t everyone reading the Times online anyway?

(Photo credits: NY Times building; April Fools edition; iPad version)

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