Next Time Use The US Postal Service

Letter Carrier US Postal Service

Letter Carrier US Postal Service It has been widely reported that many people did not get their Christmas presents delivered on time by UPS and FedEx.  How did this happen?

“The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast,” a UPS spokeswoman said.

Before all of my Teamster brothers and sister come down on me, let me say that I do not blame any of the drivers or people who process the packages, I am blaming the company for making promises they could not keep.

Both UPS and FedEx are world renowned for their overnight package delivery.  They revolutionized the overnight package delivery with a huge fleet of airplanes and midnight processing in central US locations.  However this did not help them avoid all of these late deliveries.

The blame does not fall solely on UPS or FedEx, much of the blame falls on online retailers who promised delivery by Christmas.

The Wall Street Journal reports:

“During the last shopping weekend before Christmas, Web sales jumped 37% from the year before, according to IBM Digital Analytics.”

Online retailers pushed the limits of what UPS and FedEx could do on a normal day and quickly overwhelmed them during the Christmas rush.

Although weather, Web glitches and late deliveries from manufacturers played a part in late deliveries, the sheer unanticipated volume of holiday buying this year may have been the biggest problem, retail analysts said.”

All of these things created a perfect storm that nobody could recover from.  That is except for the US Postal Service.

The government-run competitor was swamped with parcels just like UPS and FedEx were, with holiday package volume 19 percent higher than the same period late year. But there were no widespread complaints about tardy deliveries by USPS.” (BusinessWeek)

United States Postal Service fleet; U.S.A.The USPS service handled all of the same extra packages as UPS and FedEx and they did it without being late. In fact the USPS delivered over 75,000 packages on Christmas day!

The postal service did it all in spite of reductions in personnel and cuts to funding.  The trumped up claim that the USPS is going bankrupt is just a ploy by lobbyists and government officials like Rep Darrell Issa, to turn the US Postal Service into UPS.

Without the pre-funding obligation the USPS would have made over $600 million dollars last year alone.  While FedEx and UPS did make higher profits, the USPS is not issuing refunds to thousands of costumers for late deliveries.

One of the key money saving ideas that Congress and the Postmaster General tossed out is to end Saturday delivery.  The irony is that during this holiday season the USPS actually delivered seven days a week throughout December.

When it comes to getting your package there when they say it will get there, I will trust the 238-year-old postal service.

Without Pre-Funding Obligations The USPS Would Profit How Much?

United States Postal Service fleet; U.S.A.

United States Postal Service fleet; U.S.A.

The new USPS Financial Report issued Friday further validates the claim that the Postal Service is neither broken nor in crisis. Excluding the pre-funding expense the USPS has turned a $660 million profit delivering mail in fiscal year 2013. Showing again that Senator Carper, Senator Coburn and Congressman Issa are manufacturing a postal financial crisis as an excuse to dismantle it. Standing in their shadows are vultures named FedEx and UPS.

Senator Carper on Friday in an interview with NPR spoke of the need to “right size” the Postal Service. Apparently Mr Carper has not noticed that the Postal Service has eliminated 31% of its jobs in the last 10 years. Going from a career workforce of 729,000 in 2003 to slightly over 500,000 at the present time. While letter mail volume has dropped, it has been made up by a spike in highly profitable parcel delivery that as of this moment is at all time highs. Adding to that the Postal Service now delivers to 10.8 million more delivery points than in 2003. Yet Carper makes the outrageous claim that the Postal Service needs to be “right sized” and has too many workers. Mr Carper just insulted 500,000 postal workers and the intelligence of any informed observers.

NALC President Fred Rolando attempted to enlighten congressional leaders on Friday:

“The congressional priority should be to address the actual source of red ink: the $5.5 billion annual pre-funding albatross that is hampering the Postal Service. This mandate is not only onerous, it is unnecessary, because the Postal Service already has put aside sufficient money to meet the needs of future retirees for decades to come. Few, if any, companies can say the same.”

“The path to profitability is clear: Address the pre-funding fiasco and give the Postal Service the freedom to innovate and grow in the digital era. Do not eliminate Saturday delivery, which would raise costs for small businesses open weekends, and do not force people to traipse around their neighborhood looking for cluster boxes. Such steps would inconvenience the public and would destroy the Postal Service by driving mail—and revenue—out of the system.”

It appears that Senator  Carper and Senator Coburn  are being influenced by FedEx and UPS who would capitalize on a dismantled Postal Service. The facts paint the picture: Since Carper’s reelection nine months ago he has received $30,000 from FedEx and 26,500 from UPS .  His next election is over 5 years away! Why the sudden interest? In January, Carper assumed the powerful chairmanship of the Homeland Security and Government Affairs Committee. He became a powerful man in the Senate regarding Postal Affairs.

The ranking member of that committee is Senator Coburn (R-OK). Coburn infamously introduced an amendment in Postal Bill S1789 last year that created quite a buzz. Amazingly it would “require the Postal Service to dismiss its workers who are retirement eligible in order to cut costs”  It is unknown if Coburn will reintroduce this amendment in S1746.

Colburn introduced with Carper the Postal Reform Act of 2013 (S1746) he has also been the recipient of $25,000 from FedEx this calendar year. Placing FedEx in the top five of his donors. Coburn , it can be argued, owes his political career to ALEC founder the Koch Brothers

FedEx and UPS are members of the American Legislative Exchange Council (ALEC)  and both companies have held the vice-chair position on this insidious anti worker and union busting group. FedEx and UPS have donated enormous money over the past few years to Carper and quite possibly they helped craft the new Postal Reform Act S1746.

In the House of Representatives FedEx has been an enthusiastic supporter of Issa’s draconian HR 2748. In the past a Democratic controlled Senate would be the voice of reason and push back against the extreme right-wing ideologues of the House. That does not seem to be the case at this time as Carper is adding fuel to their witch hunt.

The Postal Service is  governments most popular and efficient agency and its being dismantled for pure ideology and greed. Fed Ex,UPS and other ALEC members will profit immensely by the privatizing of the Postal Service and the destruction of their unions.

 

Another stalemate?
Or a chance to save the economy?

Top400 AGI

The days are ticking by, as our federal government heads toward sequestration (March 1st) and a possible shutdown (March 27th).

House Republicans have drawn the same line in the sand that they drew – and tried to maintain – at the end of last year. They have pledged allegiance to Grover Norquist: “No new taxes.” They would rather cut food stamps than cut military spending – but they would also rather cut the military than increase taxes. Read today’s NY Times story here.

Now’s a good time to step away from the right-wing rhetoric and take a closer look at some actual facts.

Each year since 1992, the IRS has published “information from the Top 400 individual tax returns.” The latest “Top 400” publication covers the years 1992 through 2009. (Remember 2009? According to economists, the 2007 recession ended in June 2009. Even though most of us are still dealing with the effects of that “longest and most painful downturn since the Great Depression.”)

Top400 AGIThe “Top 400” statistics clearly show what’s happening at the top of the economic scale. And despite the recession, and after accounting for inflation, those at the top are doing just fine: in 2009, the top 400 had income almost three times higher than in 1992.

(Yes, in 2009, the Top 400 taxpayers had an average income of more than $123 million. Wouldn’t it be nice if everyone’s income was three times higher than it was in 1992?)

Top400 Tax RateThe US has traditionally had a “progressive” income tax structure: those with more income pay taxes at a higher rate. But that’s not what has been happening.

(In 1992, the Top 400 paid taxes at an average rate of 26.4%. By 2009, the Top 400 average tax rate was only 19.9%. What happened over those 17 years? More money, lower tax rate for the Top 400. While the country’s economy came to a screeching halt.)

Top400 Dividend IncomeOne of the most revealing statistics from that IRS report is the amount of income the Top 400 takes as dividends rather than salaries. Since 1992, even accounting for inflation, the amount of dividend income has increased by 600%. In 2009, as the recession was bottoming out, the Top 400 took home an average of $16 million each in dividend income.

What’s the big deal about that? Unfortunately, the IRS doesn’t release statistics about how much dividend income the Top 400 receive from the same companies they control. But…

Remember what Mitt Romney taught us about America’s economy? How – rather than reinvesting corporate profits in new hires or capital improvements – many executives and investors have been wringing dividends out of their companies? (And often, like Sheldon Adelson, spending money on political influence?)

Remember that FedEx paid an estimated $8.5 million in dividends to CEO Fred Smith last year? Wonder how else that $$ could have been spent? (Read “FedEx and the Real Reason Why There’s No Jobs” in Forbes here.)

Yes, the fiscal cliff negotiations increased the tax rate on dividends from 15% to 20% – but that’s still significantly less than the tax rate on salaries. Which means CEOs are still going to prefer taking home compensation through dividends, rather than salaries.

But each dollar paid to the CEO in dividends costs the company (and the economy) a whole lot of money that could have been reinvested. Going back to Fred Smith as an example, his 15 million shares in the company represent only a fraction of the outstanding stock. For Mr. Smith to receive $8.5 million in dividends, personally, the company has to pay out well over $100 million in total dividends – money that could have been invested in new hires, or new planes, or new facilities (or improved employee benefits).

The low tax rate for dividends is a perverse economic incentive. It discourages hiring. It discourages reinvestment and long-term corporate planning. It discourages growth. It encourages concentration of wealth at the top of the economic scale.

Someone once said “don’t ever let a good crisis go to waste.”

As we head toward (and through) sequestration and shutdown threats, maybe we can hope. Maybe these latest Congress-created crises can have a happy ending.

Maybe whatever political “compromise” is eventually reached will include more changes in dividend taxation.

Maybe the country can end this vicious cycle of wringing profits out of the economy. Maybe the country can go back to growing our entire economy, not just the personal incomes of the top 400.

It’s going to be an interesting couple of months. Fasten your seatbelts for another bumpy ride.

Why On Earth Is The USPS Paying FEDEX Stockholders Millions In Dividends

USPS Subcontractors

According to an annual report from a Washington DC law firm, FedEx is the top US Postal Service contractor for the tenth consecutive year.

You read that right.  The Postal Service’s biggest competitor, FedEx, is also its largest contractor.  In FY2012, the USPS paid FedEx $1.618 billion – an 8% increase over the previous year.

UPS had an even bigger increase.   In FY2012, the Postal Service paid UPS more than $126 million – a 24% increase from FY2011.  (Of course, UPS previously employed Janna Ryan – the wife of House Budget Committee Chairman Rep. Paul Ryan – as their lobbyist.  And she was reportedly a very effective lobbyist.)

Contracting with the Post Office is Big Business.  The Postal Service is spending almost $12 Billion a year on private contractors – even though the Postal Service is so financially strapped that they’re about to cut delivery service by one day a week.  Does this make any sense at all?  

There has been a lot of talk lately about “privatizing” the Postal Service.  Based on the law firm’s report, it looks like the Post Office is being privatized, one little piece at a time.  Just another example of government creating something of value, only to hand over the profits to someone else.  Just one more example of our government being used to further someone else’s private interests.

How many Postal Service jobs were lost, eliminated or downsized due to all these contracts?

And what percentage of each postage stamp we buy has been converted into private profits?

Let’s look at FedEx.  FedEx had about $43 billion dollars in revenues last year.  Of that, $1.618 came directly from the Postal Service.  That means the Postal Service is responsible for 3-4% of FedEx’s total revenues.

FedEx made quite a profit last year.  Company executives get to decide how much profit is paid out as dividends, and how much is reinvested in new equipment and new hires.  Last year, FedEx paid out a lot in dividends.

Frederick Smith is CEO of FedEx.  According to SEC filings, he owns about 15 million shares of the company.  Last year, FedEx paid out a total of 55 cents per share in dividends.  Do the math… and it looks like Mr. Smith received about $8.5 million in dividends (not counting dividends to his family holding company, his wife, or his retirement fund).

Do the math… and if 3-4% of FedEx business (and profits) are attributable to the Postal Service… that would mean Postal Service contracts account for more than a quarter-million dollars’ worth of Mr. Smith’s 2012 dividend income.

(Wonder how much stock other FedEx employees hold?  Click here.  Then do your own math about how much of their dividend income is attributable to Postal Service contracts.)

$12 Billion in Postal Service outsourcing.  Why?  Why are we continuing to outsource good jobs to private companies who are collecting record profits?  Why are we paying corporations billions of dollars to do exactly what workers at the Postal Service could already do?  The Postal Service continues to shed workers at an alarming rate while FedEx and UPS continue to make more and more money from the Postal Service.

FedEx made over $1.4 million in campaign donations last year.  Is it any wonder there’s so much talk about “privatizing” the Postal Service?