The U.S. Postal Service Is One More Example Of Government Mismanagement

Online, June 9, 2011 (Newswire.com) - Financial advisor Dennis Tubbergen frequently writes about the current state of the U.S. and global economies in his online financial blog and in his monthly Moving Markets™ newsletter. In his May 31, 2011 blog, Tubbergen took a look at the postal service in our country.

"It's no secret that the U.S. Postal Service has been on shaky financial ground for a long time," begins Tubbergen. "Bloomberg Business Week reported on May 26, 2011 that the government-managed business is nearing insolvency."

Tubbergen quotes the article as saying Phillip Herr, Director of Physical Infrastructure Issues for the U.S. Government Accountability Office, has spent the last three years trying to decipher what is wrong with the U.S. Postal Service.

While Herr acknowledges that many of the executive-level employees of the postal service "are consumed with delivering mail," that passion has not crossed over to a realization of how to stop the service's financial condition from worsening or into creating long-term resolutions such as a 10-year plan.

According to Bloomberg, Herr had until the end of 2011 to provide a report on the postal service. Finding the postal service in such financial dire straits, Herr and his committee delivered their report 18 months early - in April of 2010.

The article goes on to say, "A year later, the situation is even grimmer. With the rise of e-mail and the decline of letters, mail volume is falling at a staggering rate, and the postal service's survival plan isn't reassuring." In the years 2006 to 2010, the post office's mail volume dropped by 20 percent.

And the postal service's two biggest rivals, Fed Ex and UPS, operate with different philosophies and budgets. According to the Bloomberg report, 80 percent of the postal service's budget goes to salaries and benefits, while those figures for FedEx are a mere 43 percent. UPS shows a slightly higher number at 61 percent.

If you are one of the many people who don't know the make-up of the postal service, it employs 571,566 full-time workers and has 31,871 individual post offices. It is the U.S.'s second-largest civilian employer. According to the Bloomberg story, "The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms."

"There are a few items worthy of noting here," cites Tubbergen. "First, the U.S. Post Office has no long-term, 10-year plan. Not unlike almost any other area of government. The precarious position that the U.S. Post Office finds itself in is a result of no proactive plan based on reason."

Which brings us to Tubbergen's second point.

"The very fact that it costs the same amount of money to deliver a first-class letter to the most remote areas of the country as it does to deliver the same item across town is without reason," proclaims Tubbergen. "Instead of thinking through what might make sense, the bureaucrats simply stay in reactive mode and leave good, old-fashioned common sense behind."

Tubbergen's third point is the USPS's bloated salaries and benefits.

"In a service business, FedEx has almost half the percentage of its budget allocated to salaries and benefits," notes Tubbergen. "Of course, FedEx is a company that is responsible to shareholders for profits; the USPS simply asks the Treasury for more money. When profit is a motive, salaries, benefits and other expenditures are commensurate with that motive; bureaucracies never operate that way."

Tubbergen believes this story is symptomatic of the fiscal problems with our government.

"There is no long-term plan in place that incorporates reason and the proper motive," concludes Tubbergen. "Instead, many of the politicians continue to make promises that cannot be kept. As the next election cycle is already underway, vote reason and common sense where you can find it."

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at www.dennistubbergen.com. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.