Some advocate for banking services as USPS savior
The Postal Service should once again offer government-backed savings and accept deposits like it did in 1911, an expert said. Those services have proved to b...
The cash-strapped Postal Service could stem the flow of mounting losses by returning to days of old when it offered banking services, an expert said Tuesday.
Specifically, Congress should consider allowing the agency to offer tools for personal savings, said Princeton University scholar Sheldon Garon.
“Postal savings generate something like 22 percent worldwide of the revenues of international post offices, not including ours, obviously,” Garon told Federal News Radio after a New America Foundation presentation about personal savings and the Postal Service. “There are post offices where 50 percent of the revenue comes from postal financial services.”
Garon said he envisioned post offices that would offer, among other things, mutual funds and even small loans.
Many countries have successfully adopted the concept as a way to increase the rate of savings among citizens while also increasing revenue for post offices. The United Kingdom’s Post Office, for example, has expanded beyond savings to offer credit cards.
But USPS opposes the idea of offering banking services at its post offices, even as it predicts losses exceeding $14 billion this fiscal year.
“There are so many banks in this country that we don’t believe” it would be a wise move, adding the services would solve the agency’s financial problems, USPS spokesman David Partenheimer told Federal News Radio.
Instead, postal leaders are advocating other proposals to save money, including a shortened delivery-week that could save $2.7 billion each year, Partenheimer said. USPS also is hoping that Congress will ease the mandate to pre-fund future retiree healthcare. The current setup requires an annual payment of $5.5 billion, which officials have called a major factor behind the agency’s financial losses.
A postal financial services system in the U.S. would be a return to years past. In 1911, the Post Office Department, the USPS predecessor, began offering government-backed savings services to Americans. The system also accepted deposits for more than half the 20th century, but Congress started dismantling it in 1966 after banking reforms and economic improvements made the postal savings system obsolete, according to the National Postal Museum.
Hunger strike to end retiree healthcare prefunding
The renewed call to offer banking services at post offices came on the second day of a week-long hunger strike by postal workers and labor groups pressuring Congress to eliminate the prefunding mandate.
Rep. Dennis Kucinich (D-Ohio), a two-time presidential candidate, threw his support behind the hunger strikers, saying the requirement is a veiled attempt to undo the government control of the Postal Service.
The prefunding mandate is “a means of trying to demolish the Postal Service and set the stage for privatization,” he said.
Supporters of the requirement, which Congress established in 2006, advocate it as a way to ensure postal retirees receive all the benefits they deserve.
“If we don’t have prefunding, a few years down the road we’ll realize there’s this enormous liability, there’s no way to pay it off, [and] we’re going to need a big taxpayer bailout,” said Mike Schuyler, senior economist at the Institute for Research on the Economics of Taxation.
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