Would A Lottery Bail Out the Postal Service?

Running a national lottery could help the U.S. Postal Service close its multibillion-dollar budget gap, according to a Postal Regulatory Commission official.

A Postal Service-run lottery “could offer the potential for substantial profits for the Postal Service and utilize its current retail infrastructure with its 36,000 retail outlets, claimed to be the largest retail network in the world,” Kenneth E. Richardson, a public representative on the PRC’s staff, wrote last month.

“Sales could be encouraged if winners were tied, for instance, to sales slip identification numbers or other postal purchases or mail tracking numbers. The national scope of the Postal Service could exceed that of current multi-state lotteries in scale which generate hundreds of millions of dollars, annually, if not billions, for their sponsoring states,” Richardson added.

The lottery idea was just a footnote in a motion Richardson filed asking that the USPS “provide estimates of rate adjustments necessary to maintain financial stability” during the next two years “with or without required retiree health benefit payments.” (As Dead Tree Edition and others have pointed out, the billions of dollars in such payments have little to do with retirees and essentially are interest-free loans to the federal government.)

“The estimates will likely include annual increases of several pennies” for a First Class stamp, wrote Richardson, without addressing the issue of how rate increases would affect mail volumes.

Richardson's motion asked that the Postal Service provide the estimates in its annual compliance report. The USPS responded that Richardson was asking it in two weeks to present what amounts to an old-fashioned postal rate case, which would take months to prepare.

The annual compliance report mentions neither the requested estimates nor the lottery idea, but that might not be the end of the story.

The PRC initiated a review of the compliance report this week that postal commentator Alan Robinson notes "could become the equivalent of a 'rate case light,'" with a special emphasis on mail that doesn't cover its costs. And it appointed Richardson as the public representative on the case.

Although the Postal Service is on track to become insolvent within a couple of years, Congress has shown no appetite for wrestling with the problems that vex the USPS. The Postal Service's requests to stem the financial tide -- by eliminating Saturday delivery and eliminating the prepaid retiree-benefit requirement, for example -- will inevitably lead to a Congressional discussion of whether postal rates should be raised. So it makes sense for the PRC to air the issue and allow it to be hashed out before it gets to Congress.

The lottery idea might appeal to Congress because it could improve the Postal Service's finances without increasing the federal deficit or reducing service. Most proposals to let the U.S. Postal Service enter new lines of business run up against Americans' distaste for letting government entities compete with private enterprise. But allowing  the USPS to compete with state governments is another story, especially because the states don't have powerful lobbying operations.

Related articles:

• How USPS Could Bypass Congress on Saturday Delivery, which explains how the Postal Service's pre-funding of retiree health benefits is an accounting shell game that makes the federal deficit seem smaller.
• Postal Accounting Snafus Might Be Bad News for Publishers, which questions the compliance report's calculations regarding the Periodicals class.