Politicians are playing football with the Post Office. President Trump wants to kill it. Democrats seem to think the current system is sacrosanct. USPS is one of many government programs that transfers wealth from high density cities to low density rural and small towns. USPS has made these transfers for more than 100 years. Rural voters need to understand the facts about USPS and their communities.
John Oliver took on President Trump in a recent episode of his HBO show. He’s entertaining. He raises several concerns. And, he proposes one option to his viewers: Buy stamps.
We’ve looked into the history of USPS in detail. We’re happy to share this research with you. However, John Oliver’s suggestion that you buy stamps to save the system is just terrible.
Why? USPS works just like any business that sells a service before delivering it to their customers. USPS does not recognize revenue you paid for the stamp until you drop a letter in the mail. When you buy stamps, you don’t provide USPS operating earnings. You give them cash they hold in reserve against the future obligation to deliver your letter.
It gets even worse. Oliver notes the price controls imposed on first class postage. So, if you buy a Forever stamp, you pay today’s price for a future obligation that is growing. It’s certainly growing faster than what USPS earns on its cash reserves. So, the liability grows over time.
Instead of making the problem worse, let’s work on practical solutions. Stay tuned as we go deeper on the causes and possible solutions for the USPS.