A New Slogan for the Postal Service: "Just Say No"

The Postmaster General didn’t just tell major customers this week that the U.S. Postal Service is a business and not a government agency. He followed up with a move right out of the corporate playbook – announcing plans to stiff a major creditor.

Pat Donahoe’s revelations at the National Postal Forum about what the Postal Service planned to do, such as simplified rules and a new ad campaign -- got most of the media attention. But at least as significant was what he said about what the Postal Service will not do.

It will no longer see itself as “the face of the federal government in every community.” It won’t offer banking services. It won’t sell cell phones. And it might not make a controversial payment to the federal government that is due Sept. 30.

“We are evolving as an organization from one that is mostly oriented toward public service, to one that is mostly oriented toward competing for customers,” Donahoe said in a speech at the postal forum. “The heart of what we do, ultimately, is delivering. This concept – that the core function of the Postal Service is delivering – is powerful.”

A cynic’s translation: “If you want us to keep an unprofitable post office from closing just because it’s the only gathering spot in the community, try getting FedEx to open a facility in that town. If you’re concerned about the jobs an area will lose as we make efficiency moves, ask UPS to hire some extra employees in that region.”

“In the past couple of years, there have been calls for the Postal Service to get into banking or selling cellular phones as a way of raising revenue,” Donahoe said, without mentioning the USPS Office of Inspector General. “To be honest, those ideas never made any sense to me. Our focus has to be on perfecting our core function of delivering. This notion will guide us as a business. It will be a filter for the way we approach the marketplace and the way we support the industry.”

That may indicate Donahoe takes a dim view of some other non-distribution revenue ideas that have surfaced in recent years – such as providing electronic mailboxes, acting as a go-between for online payments, and mounting mobile sensors on delivery trucks.

Acting like a private company only goes so far. The Postal Service is on track to be insolvent on Sept. 30, when by law it must give the federal government about $5.5 billion for what is euphemistically referred to as a prepayment of retiree health benefits. Unlike a private company facing similar circumstances, it can’t file for Chapter 11 bankruptcy protection.

Then again, if it were a real business, USPS wouldn’t have to fork over the money. Its retiree health fund is already quite healthy; the payment is merely an accounting gimmick that Congress uses to make the federal deficit look smaller. (See Congress Hears the Truth About Postal Service Finances for more information.) Using common business rules for accounting, the "prepayment" (actually, it's an overpayment) would probably be considered an asset rather than an expense.

Also unlike a private business, the Postal Service doesn’t have to worry about its creditors forcing it into bankruptcy or foreclosing on its properties. That leaves it with another option at the end of the fiscal year when the feds come asking for money the Postal Service doesn’t have and can’t borrow. Call it the Nancy Reagan Plan: “Just say no.”

Though it has a few months to decide on that course of action, Donahoe sounded like a man who had already made up his mind when he appeared at a postal forum news conference, wrote Larry Riggs of Multichannel Merchant.

“We’ll pay our employees, we’ll pay our suppliers, and we won’t pay the government. We have contention as far as owing that," Riggs quoted Donahoe as saying.