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As U.S. Postal Service Faces Default, Critics See Manufactured Crisis to Speed Up Privatization

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For months, Americans have heard dire warnings about the impending collapse of the United States Postal Service due to fiscal insolvency. As Republicans push to privatize the post office, the agency is now bracing for its first-ever default today. Unlike every other governmental agency, the Postal Service is required to fund 75 years of retiree health benefits over just a 10-year span. We discuss the fight over the Postal Service with Democratic Rep. Dennis Kucinich of Ohio and Chuck Zlatkin of the New York Metro Area Postal Union. “The American people have to wake up here about what’s happening with the Postal Service,” Kucinich says. “The whole concept of the Postal Service, embedded in that is the idea of universal service, that if you’re poor, you live in a rural area, you’re going to get served just like someone who lives in a city and who may be wealthy.” [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

NERMEEN SHAIKH: For months, Americans have heard dire warnings about the impending collapse of the United States Postal Service due to fiscal insolvency. Now, at midnight today, the agency is bracing for its first-ever default on billions in payments due to the Treasury. Although the Postal Service’s inability to pay the five-and-a-half-billion-dollar payment toward retiree health benefits won’t immediately effect the Postal Service’s day-to-day operations, it is likely to fuel a fresh round of demands to examine the agency’s role in America today. First-class mail volume, which has fallen 25 percent since 2006, is projected to drop another 30 percent by 2016. The agency faces a cash shortage of $100 million this October stemming from declining mail volume that could balloon to $1.2 billion next year.

The U.S. postmaster general, Patrick Donahoe, has asked Congress to reduce the financial burden on the agency and let it undergo significant cuts to address the decline in mail due to web transactions. Those cuts include shedding some 150,000 jobs, the elimination of Saturday delivery, and the closing of roughly half the agency’s mail-processing facilities—measures largely opposed by postal unions. Earlier this year, Donahoe said revamping and consolidating the agency is a natural outcome of changing times.

POSTMASTER GENERAL PATRICK DONAHOE: We have to start making some changes as this volume continues to go down. I was in Rockford the other day. We have no volume there. We have—the volume and the work hours that we use, the time that we use our machines, can easily be absorbed in a facility up the line with no problem, no additional costs there, and then we take the people who work in Rockford and find jobs for them within our system. We’re very careful. We haven’t hired anybody. We have plenty of landing spots. It can be a very fair outcome for both customers and employees, and allows us to get these finances in order.

AMY GOODMAN: But postal workers say the much-touted crisis facing the U.S. Postal Service isn’t what it seems. Rather, they point to a 2006 law that forced the Postal Service to become the only agency required to fund 75 years of retiree health benefits over just a 10-year span. The American Postal Workers Union says the law’s requirements account for 100 percent of the service’s $20 billion in losses over the previous four years, without which the service would have turned a profit. In late June, 10 current and former postal workers launched a hunger strike to protest the pre-funding requirement.

JAMIE PARTRIDGE: Well, the problem is not about the mail volume going down, and problem is not the internet. The problem is not even private competition. The problem is a pre-funding mandate that Congress imposed in 2006 that the Postal Service pre-fund retiree health benefits 75 years in advance.

AMY GOODMAN: The Postal Service had hoped that Congress would help defer the payment that’s due today, but the House has taken no action. The Senate passed a measure that provided incentives to retire about 100,000 postal workers, or 18 percent of its employees, and allowed the post office to recoup more than $11 billion it overpaid into an employee pension fund. The Senate declined to act to stop Saturday deliveries.

Well, for more, we’re joined now by two guests. In Washington, D.C., we’re joined by Dennis Kucinich, Democratic Congress member from Ohio, longtime supporter of the U.S. Postal Service. Here in New York, we’re joined by Chuck Zlatkin. He’s the legislative and political director of the New York Metro Area Postal Union.

We welcome you both to Democracy Now! Congressmember Dennis Kucinich, explain how this has happened and what you think needs to happen.

REP. DENNIS KUCINICH: Well, Congress passed a law in 2006 that mandated that the Postal Service pre-fund its employees’ health—its retirees’ health benefits for 75 years, but to do it within a 10-year period. So, this $5.5 billion payment that’s made today that the Postal Service isn’t going to make, that Congress should correct, is a manufactured crisis.

Now, why would interests what to manufacture a crisis? To further privatization. Who’s lobbying against the post office on this? Banks, for one. I mean, think about it. Banks would love to crush the Postal Service, because they wouldn’t have to process checks the way they do now, number one. Number two, banks would head off any attempt for postal services to go into certain banking functions such as they do right now in the U.K.

So this is—you know, the American people have to wake up here about what’s happening with the Postal Service. And, you know, finally, Amy, under the Constitution, guess what? It’s Congress’s responsibility to establish a postal service, Article I, Section 8, Clause 7. And Congress is right now working on disestablishing a postal system.

NERMEEN SHAIKH: Are there other groups, Congressman Kucinich, apart from corporate interests, that are exerting pressure on members of Congress for the privatization of the Postal Service?

REP. DENNIS KUCINICH: Well, you know, I can say, you know, the—I would say that, let’s look who wins if this happens. You know, if you start to cut overnight deliveries, well, UPS and FedEx win. So there are—you know, I can’t say that they’ve lobbied me on this, but you can see who the winners and losers are. And who loses? The American people, because the whole concept of the Postal Service, embedded in that is the idea of universal service, that if you—that if you’re poor, if you live in a rural area, you’re going to get served just like someone who lives in a city and who may be wealthy. But this whole idea of universality, which is a bedrock principle of democracy, is about to go the way of the dodo bird, because Congress has manufactured a crisis with the passing of the 2006 law and wants to compound the crisis with other bills that would break union contracts, restrict—move to five-day delivery and create other reductions, so that you have a downward spiral in the service model and would begin the disintegration of the U.S. Postal Service. This is wrong, and it has to be exposed for what it is: a fraud.

AMY GOODMAN: Chuck Zlatkin, if you were to watch the corporate networks, you would have no idea about this special deal that was worked out with the Postal Service to fund, over a 10-year period, the pensions. You would have no idea that, otherwise, the Postal Service would be in the black. What you hear is, “We had to say goodbye to the telegraph. And, you know, with email, with all the different kind of social media, we just don’t need the post office anymore.” Your response?

CHUCK ZLATKIN: Well, I think it’s an absurd argument. I mean, everybody who orders something on their computer, they still haven’t figured out a way to get the shirt through the computer to you. It’s still delivered to you. And it may be true that people aren’t writing letters to grandma the way they used to, but everyone’s getting their Netflix through the Postal Service.

So, what hurt the post office were factors that could have survived the electronic alternatives. It would still be OK. Even with the economic collapse of 2008, where, you know, businesses used the Postal Service less, the Postal Service would still be OK. It’s these congressional mandates.

But now, you know, we’re talking about 2006, but we’re not going back to 1971, when the Postal Service was formed after the great postal strike of 1970 and postal workers got collective bargaining. What happened then is that the Postal Service had to pay into the employees’ pensions. And there was a study done in 2009 by the inspector general of the Postal Service that said the Postal Service had overpaid $75 billion. In 2010, the Postal Regulatory Commission commissioned their own study that said, “Oh, it was only about between $50 and $60 billion.” So, in addition to these overpayments since 2006 into the future retirees’ health benefits, they’ve overpaid into the pension funds for decades. The Postal Service has been a cash cow for the government, not vice versa.

NERMEEN SHAIKH: Last week, Peter Orszag, the former Obama administration Office of Management and Budget director, wrote an opinion piece for Bloomberg News called “Best Fix for Postal Service Is to Take It Private.” He wrote, quote, “Those who believe in the usefulness of government must be vigilant about making sure all its activities are vital ones, since the unnecessary ones undermine public confidence. With this in mind, Congress should now privatize the U.S. Postal Service.” Congressman Kucinich, could you respond to that?

REP. DENNIS KUCINICH: That last line, he said, “Congress should now privatize”?

NERMEEN SHAIKH: Yes, should privatize.

REP. DENNIS KUCINICH: Is that what he said?


REP. DENNIS KUCINICH: Boy, what a revelation. This person worked inside the White House. Think about that. I mean, we really have a government that’s just going to the highest bidder, which is all these private interest groups that are hovering around like vultures trying to pick off a Postal Service which actually is one of the strongest services that government provides through, you know, people who are involved in delivering mail. This really needs to be challenged, because this is about privatization at its core. So, thanks to Mr. Orszag for being so candid about things that I’m sure he supported when he was one of the president’s top advisers. So, you know, we need to stand up for the whole principle of government acting as a public service. Government is not there to make a profit.

NERMEEN SHAIKH: Congressman Kucinich—

REP. DENNIS KUCINICH: It’s there to provide a service.

NERMEEN SHAIKH: Congressman Kucinich, some people suggest, though, that some reform of the Postal Service is necessary.


NERMEEN SHAIKH: Do you agree with that?

REP. DENNIS KUCINICH: Of course. You know, every institution has to evolve. There’s no question about that. But to say—there’s a difference between allowing an institution to evolve and grow, and destroying it. And right now the attempt is being made to destroy the Postal Service. This would impact on all Americans. It would drive up the cost of mail. I want everyone watching this to think about what happens. If the Postal Service is destroyed, what do you think the cost of mail is going to be? What do you think is going to happen when people who live in the inner city, who may not—you know, who may not have a job and may have difficulties being able to survive day to day, how are they going to communicate with each other? I mean, this is, like, unfair. It’s also going to be a disaster for third-class mailers, because their costs are going to go through the roof. I mean, there’s something—we have to have a civics lesson here about the essentiality of Postal Service delivery universally to people in the country and what it means to them.


REP. DENNIS KUCINICH: And this is a good opportunity to teach that.

AMY GOODMAN: FedEx and UPS must be excited, Congressman Kucinich.

REP. DENNIS KUCINICH: Well, you know what? I don’t have any problem with having alternatives, but you can’t use those alternatives to try to destroy what is the main service. And that’s what I take issue with. And so, the idea that we should just privatize everything? No, absolutely not. You know, they’re trying to privatize the military, privatize other government functions. Every time you privatize something, the cost goes up to the public. It may profit the private sector, but it certainly doesn’t benefit the public. And the Postal Service is a constitutional duty of Congress, and if Congress can’t do it, those members who feel they can’t support the Postal Service, well, they ought to get out of the way and help those and permit those to come forward who support the Postal Service. That’s Democrats and Republicans alike.

AMY GOODMAN: Your colleague, at least for now, Republican Congressmember Darrell Issa of California, chair of the House Oversight and Government Reform Committee, has championed a bill that would allow for the phasing out of around 150,000 jobs and facilitate a faster move to five-day delivery. Last year, he explained to the Heritage Foundation why he thinks revamping the post office makes sense.

REP. DARRELL ISSA: We’ll be doing ourselves a favor, because we’ll be saving wages we don’t need to be paying. And, yes, it does mean there will be 200,000 people who will either be retired or doing other work, in addition to the retirement, but that’s what Americans are dealing with. Americans do not get to keep a job just because they work for the government. The private sector doesn’t have that. If there’s a slowdown at General Motors, you’re out on the street waiting to come back when times are better. In the case of the post office, this slowdown is permanent.

AMY GOODMAN: That’s Republican Congressmember Darrell Issa. Your response from the other side of the aisle, Congressman Kucinich?

REP. DENNIS KUCINICH: Well, Darrell Issa is a brilliant businessman. I mean, he—you know, if we put Darrell Issa in charge of the U.S. post office and had that as his charge to help the post office survive, he’d figure out a way to do it. But he’s on the other side of this. You know, he’s advocating the cause of private business. OK, let’s look at that. But it’s not his decision to make alone.

We have to understand this principle of universal service goes beyond corporate profit. It goes to the essence of what a democracy is about. Think about it. Why did the founders put the post office in the Constitution? I mean, really? You know, they were delivering mail by horseback then. So, there’s—because there was a thought about being able to move the commerce of the country, and not only that, but to be able to help people communicate with each other. That need is no less. Can the post office update itself? Of course. But that’s not what the argument is underpinning this. The argument is whether or not the post office is going to survive and whether it’s—or whether it’s going to be thrown in a trash bin to be picked up by corporate interests, who will get it for essentially pennies on the dollar and then recapitalize it to make hundreds of billions or trillions of dollars in the long run. We cannot let that happen.

NERMEEN SHAIKH: Chuck Zlatkin, before we conclude, I’d just like to ask you—the post office is the second-largest employer in the U.S. after Wal-Mart. Can you say a little about what—who would be—what communities would be the most greatly impacted by what happens tonight, if there is a decision taken?

CHUCK ZLATKIN: Well, no one will be impacted by tonight, because this is—they’re just not making a payment that they don’t have to make in the first place. Service will continue. What will be used by tonight will be excuses for the forces of privatization, the people who want to destroy the Postal Service, to move forward with their plan. But the people who most depend upon the service are the elderly, poor people, the disabled, small-business owners. They can’t afford the alternative. It’s for them that we’re fighting, because as far as the union is concerned, if the people get the service they deserve, there will be plenty of jobs for us. The Postal Service isn’t a make-work business. It’s an essential service for the American people.

AMY GOODMAN: Congressmember Kucinich, I wanted to ask you about a couple other quick issues. In Texas, the Tea Party-backed candidate, Ted Cruz, has defeated Lieutenant Governor David Dewhurst in a runoff for the Republican Senate nomination. Cruz had once been considered a long-shot candidate but surged in the polls to beat out Dewhurst, who had won the backing of Texas Governor Rick Perry. Dewhurst was considered conservative; Cruz, the Tea Party candidate. The significance of this?

REP. DENNIS KUCINICH: Well, you know, the Tea Party remains organized. And who’s ever organized obviously has an advantage in an election, allowing that the organization also is funded. So, you know, the Tea Party is a powerful force—can’t be denied.

AMY GOODMAN: And your plans, Congressmember Kucinich? You will be leaving the Congress. What do you plan to do next?

REP. DENNIS KUCINICH: Well, I—it’s a range of things. I mean, I’m accelerating towards the finish line and just doing everything I can to use the available time to keep championing the concerns of the American people. But I’ve already established an organization called Kucinich Action, which is at, which will hold our political activity as a constant factor in helping people organize at all levels, but to keep our focus also trained on matters of war and peace, on jobs, on the environment. So, is goign to be part of my political activity. Beyond that, there’s a number of different options I’m looking at. I’m really doing everything I can to stay as focused on the duty at hand in Washington, including, of course, trying to work with others to save this Postal Service.

AMY GOODMAN: Congressmember Kucinich, I want to thank you very much for being with us.


AMY GOODMAN: And Chuck Zlatkin of the New York Metro Area [Postal] Union, thank you very well—thank you very much for being with us, as well.

This is Democracy Now!,, The War and Peace Report. When we come back, we’re going to cover the court-martial of those involved with the death of Private Danny Chen and also go inside a Broward jail to speak with a young activist who’s trying to find out about immigrants inside who should not be deported. Stay with us.

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