Article Published in the Los Angeles Times
As the NASCAR season closes with this weekend’s race, it’s hard not to notice that the U.S. Postal Service has traded in its bicycle for a race car. For us poor stamp-buyers, that means the USPS is wasting our money at greater speeds than ever before.
Its high-profile, seven-year sponsorship of the U.S. Pro Cycling Team, led by six-time Tour de France winner Lance Armstrong, is finally coming to a finish. But the postal service has now embraced the roaring engines of the NASCAR track by slapping its logo onto Johnny Sauter’s No. 27 stock car.
If the postal service were a free-market business, veering onto the NASCAR speedway might make sense. Auto racing is the nation’s second most-watched seasonal sport on television, right behind football.
But while the USPS tries to walk and talk like a trendy private company, high-octane sports sponsorships and all, it is in fact a lumbering government agency that survives only because of its federally enforced monopoly.
U.S. consumers can’t move to another low-cost letter delivery service for first-class mail. Private delivery companies operate under an “urgent mail” loophole in the federal statutes, which state that a company cannot charge less than $3 to deliver so much as a Dale Earnhardt Jr. postcard to your door. And it’s illegal for anyone but the USPS to use your mailbox.
As a government agency, the postal service has all kinds of other unfair advantages as well. It doesn’t have to pay real estate taxes. It’s immune from truth-in-advertising regulations, so it can say anything it wants in its costly commercials. It has the power of eminent domain and is exempt from antitrust law, SEC transparency requirements, full compliance with U.S. Customs and OSHA regulations, and much of the paperwork required of non-government organizations.
The postal service even has its own armed police force, which it can use to enforce its own legally binding regulations designed to hinder competitors. In 1993, armed postal inspectors infamously raided the Atlanta headquarters of Equifax Inc., which was then fined $30,000 for the crime of using FedEx to deliver non-urgent mail.
Postal representatives say they need to advertise to compete against private companies such as DHL, FedEx and UPS in the parcel business. But these operations are completely separate from the postal service’s core mission of delivering Aunt Minnie’s mail. If other government agencies decided to tap into the private sector, then couldn’t the Air Force offer commercial flights? Or the FCC sell cut-rate Internet access on the side?
USPS Vice President Jerry Whalen, touting the enormous NASCAR fan base, gushed that “every one of those fans is a customer of the postal service.” You bet. They’re customers because, by law, they have little choice. The race is fixed.
Despite its huge captive market, the postal service continues to use advertising to blow its own horn. Last year, its Office of the Inspector General released a report revealing that the USPS spent $48 million on sports sponsorships from 1996 to 2002 – and still couldn’t tell whether its largess was making a wit of difference. The report found that the postal service “lacked goals and objectives” for 10 out of 11 sponsorships examined. It also found that “no single executive or office [had] complete knowledge and accountability” over sponsorships. Moreover, the postal service “was unable to verify revenue claimed as a result of sponsorships and, therefore, could not determine return on investment.”
It’s not just ratepayers who pay for these USPS adventures. The red ink also translates into a hefty drain on taxpayers. The postal service is now asking Congress for a $779-million taxpayer-funded handout. And we need more advertising?
The USPS is in dire need of reform. It faces more than $80 billion in unfunded liabilities, mostly future pension and health benefits that it can’t pay. But free from market pressures – and in the grip of powerful labor unions – the USPS has steadily resisted cutting costs, downsizing or improving service.
Instead, it has used its monopoly profits to expand aggressively into sectors such as package delivery, where it steals market share by undercutting more competitive private companies. Were it not immune from federal antitrust law, the postal service would be ripe for monopoly busting.
None of this is to knock NASCAR. But until the postal service becomes a legitimate private company, it’s got no business burning millions at the races.
Sam Ryan is a senior fellow of the Lexington Institute in Arlington, Va.
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