Early on a February morning, in a glass-walled conference room high up in the Hearst Tower in Manhattan, Postmaster General Patrick Donahoe spoke in a careful, reassuring tone. “We can do this; I know that we can do this,” he told the audience, which included representatives from magazine-industry heavyweights like Condé Nast, Hearst, and Time Inc. “Hang in there with us.”
Donahoe’s talk was a keynote at a “Postal Summit” organized by The Association of Magazine Media (MPA, formerly the Magazine Publishers of America) to address the inarguably dire situation currently facing the United States Postal Service, and the complications that situation is causing for the businesses that depend on its survival.
Despite Donahoe’s assurances, his audience couldn’t be blamed for being skeptical. In the past decade, the postal service has been hit by a perfect storm of technological and cultural shifts, economic recession, and political gridlock. Since 2000, the USPS has seen a precipitous decline in the volume of mail. From 2006 to 2011, as people have increasingly sent e-mails instead of letters and paid bills online, first-class mail volume has dropped 25 percent. As the housing and financial sectors sank, so did the amount of direct mail they sent to prospective customers. The country’s second-largest civilian employer (after Walmart), the USPS has been squeezed by rising health-care costs for its half-million employees, plus the requirement to pre-fund their pensions.
While the service has often run a deficit during its 237-year history, it now faces the possibility of insolvency. Following a loss of $5.1 billion in fiscal year 2011, the service reported a $3.3 billion loss in the first quarter of fiscal 2012 alone—a period that’s typically the most profitable of the year because of mail sent in the winter holiday season. The USPS’s total deficit as of last December was already $12.9 billion, and in February, the agency projected that it may run out of cash completely by October.
All of this is alarming news for the magazine industry, which, despite its recent forays into digital publishing, still depends on the postal service to deliver almost 90 percent of its circulation. Some publishers at the summit wondered aloud just how worried they should be. What would happen if the USPS actually shut down?
“The one thing I will not do is cry wolf,” said Donahoe as he wrapped up his speech. “I will not say ‘We’re not going to deliver mail.’…If I say that, you will say, ‘I need some alternative solution.’ And once you go to that alternative solution, we may never get you back. So that’s not going to happen.”
The magazine industry’s fate and that of the USPS have always been inextricably linked. Since the very beginning of the postal service in 1775, periodicals have enjoyed an extremely favorable shipping rate, an agreement rooted in the Founding Fathers’ conviction that the spread of information and opinion across the country was vital to democracy. “Magazines and newspapers accounted for nearly all of the weight of the mail in the first half of the 19th century—as much as 80 to 95 percent—and they only paid five to 15 percent of the revenue,” said Richard R. John, a historian of communications at the Columbia University Graduate School of Journalism. “And that was almost never a controversial issue.”
The postal service, meanwhile, needs to keep magazines in the mail. As mail volume decreases, Donahoe explained in his keynote, advertising (a.k.a. junk mail) becomes an ever-larger portion of it; magazines keep people coming back to their mailboxes, which in turn keeps the postal service in business. “They need us as much as we need them,” agreed James Cregan, executive vice president of government affairs for the MPA.
Both Donahoe and Cregan said that it is unlikely that the preferential pricing scheme for periodicals will end, though some above-inflation price hikes are possible as the postal service tries to quickly reduce its debt. What is perhaps more of an immediate concern, though, is the impact of worsening service.
This could be fixed, according to Charley:
http://www.esquire.com/blogs/politics/the-post-office-lives-8757430
"As has become clear over the past five years, conservative politicians have decided that we don't need a post office any more. Under cover of technology, and using the rise of e-mail as an alibi, the Congress quite deliberately has engaged in a campaign to make the United States Postal System an unsustainable concern. They've done it quite well, actually. In 2006, when nobody was paying attention, a lame duck session of Congress, in which there was still a Republican majority, passed a neat little poison-pill called the Postal Accountability and Enhancement Act, which required the USPS to pre-fund 75 years worth of health-care benefits over the next 10 years. (No other government entity ever has been required to do anything like this.) Among other things, this prevented the USPS from raising rates, or doing anything else that would lift the weight of the fiscal millstone that had been hung upon it. That this was a deliberate act of sabotage was revealed by the fact that a report indicated that, absent this pre-payment requirement, the USPS would be running a profit of $2.5 billion. With the requirement, the service is $24 billion in the hole."
So it could be fixed by relieving the prefund requirement, bumping up rates, small adjustments. Buuuut
"So why are conservative politicians breaking so much rock trying to rid us of the curse of government mail delivery? Go back to that quote from Park and Markovitz:
The post office was 'the one concrete link between every community of individuals and the Federal government' that functioned 'importantly in the human structure of the community.... [The post office] brought to the locality a symbol of government efficiency, permanence, service, and even culture.
The entire modern conservative movement consists of an ongoing attempt to sever the relationship of a self-governing people to their government, to break down the concept of a political commonwealth."
You know what the private and public sector were doing with their pensions? No, not prefunding them. Killing them:
http://www.cfr.org/foreign-policy-history/roaring-nineties-new-history-worlds-most-prosperous-decade/p6492
"what they did during the '90s is they were allowed to use projections assuming a nine percent return on their investments and stock. What that meant was that to provide the benefits that they promised to their workers in 20 years, 25 years, or 30 years, you didn't have to put away very much money. And that meant that they didn't have to put away very much money. They could treat the rest as profits. And so that gave an uplifted view of profits.[which meant an "uplifted view" for executive compensation and tax cuts- see Ellen Schultz]
Now, two things happen. First they didn't get the nine percent return over the period of 2000 to 2002, 2003, it wasn't, they didn't actually increase at the 27 percent that they had expected."
So while all other enterprises are gutting their future liabilities, by making them unpayable because they aren't bothering to fund them (and then claiming financial crises are to blame for not paying high risk returns on meagre investments), conservatives have mandated the postal service pay 65 years worth of liabilities in this 10 year period.
This is episode #1702934 of "Government is not the problem, conservatives are,"
#1 Posted by Thimbles, CJR on Mon 14 May 2012 at 12:16 PM
Thimbles,
It might be best if you got your facts correct before spouting off: In the 2006 elections, Democrats won both the House of Representatives (233 Democrats, 202 Republicans) and the Senate (49 Democrats, 49 Republicans, and 2 Independents caucusing with the Democrats) as well as the majority of state governorships (28-22). The above article was interesting and I quickly scrolled down to see what comments might have additional suggestions for we publishers who still depend on a thriving and working post office. But alas, only a lot of jibber jab posted by someone on the Obama staff. This is not the place for your unrelated blogs. And again, please get your facts straight if you are going to blab.
#2 Posted by patricia, CJR on Tue 15 May 2012 at 08:28 AM
Hey idiot, before accusing me of getting my facts wrong, being on the Obama staff, and blabbing you should get a tiny bit familiar with the facts discussed:
http://www.govtrack.us/congress/bills/109/hr6407
(Yeah, that's the 109th congress, the famed WORST CONGRESS EVER - at least until recent idiot conservatives decided they have no higher duty than to stop the elected 'Kenyan' by busting every part of the country they can touch)
get a bit familiar with my posts: (I must be the worst Obama staffer ever since I spend half my time slagging 'the boss')
and you should perhaps look in the mirror and check your empty head for a spout.
Thanks for your contribution, now blow away lightweight.
#3 Posted by Thimbles, CJR on Tue 15 May 2012 at 11:25 AM
In other news
"Government is not the problem, conservatives are," not that we'd ever know it from the 'liberal media'.
"Last month, Thomas Mann and Norman Ornstein published an Op ed and a book making the extremely controversial argument that both parties aren’t equally to blame for what ails Washington...
It turns out neither man has been invited on to the Sunday shows even once to discuss this thesis. As Bob Somerby and Kevin Drum note, these are among the most quoted people in Washington — yet suddenly this latest topic is too hot for the talkers, or not deemed relevant at all...
“The piece focused on press culpability — it would be hard to find a more sensitive issue for the media than the question of whether they’re doing their job,” Ornstein said. “We got tons of emails from some of the biggest reporters in the business, saying, `We’ve raised this in the newsroom, and editors just brush it aside.’”..
This is curious. Is “experts confirm that, yes, one side is more to blame than the other, and journalists should say so” really too hot a topic for the Sunday shows? Is it not relevant or interesting?
Howie? Dave? Bob? George? Candy? No interest in this?
Anyone?
Hello?"
#4 Posted by Thimbles, CJR on Tue 15 May 2012 at 12:26 PM
Working for a newspaper, we'd love it if Magazines would just UPS their copies to our printing plants, and we could deliver them to the driveways for less than the post office charges. There are newspapers covering much of the country with home delivery. This should be the solution. I don't know why more magazines aren't doing this. It would help subsideze the newspaper delivery networks, and thereby help keep newspapers in business too.
#5 Posted by Annonymous, CJR on Tue 15 May 2012 at 04:07 PM
Do not put too much fault for late magazines on the USPS. I have found through at least 2 of my 9+ magazines, that the late ones are late because of the US agents' sending the magazines late in the week instead of the date assigned or that they double up. My London magazines come in 2's usually on the date given for the second one. The other seems to think since he's in NYC and I am in California, he can skip one every so often. I notify the publisher in London and Wallah!!! it shows up 3-4 days after the notice and the next 2-3 come right on time. Magazine publishers must also oversee the actions of their agents since those here in the States are just as likely to use agents as those overseas. Those agents can be just as careless and/or lazy as those whose publishers are across the ocean. Also, those of you that do get mail regularly, get to know your carrier and when it's the holiday time--esp Xmas, send
him/her a token of your appreciation for being on time. Don't require perfection since many times your late items may be late because the one who filled in, carried only 1st class mail and left the heavy things--magazines-- to your regular one later.
#6 Posted by trish, CJR on Thu 24 May 2012 at 02:49 PM