Privatization: Part II
The Post Office Heist
By Mike Krauss
Bucks County Courier Times
What is now the U.S. Postal Service (USPS) was organized by Ben Franklin and is older than the United States. It has been self funded since its inception and has never required an appropriation from the Congress.
The cost of stamps has of course risen over time, as has everything else
But now we are told the USPS is massively broke, teetering on bankruptcy, and can only be “saved” if it is privatized. Competition from private mail and package services and the advent of the Internet for routine correspondence and bill paying are the often cited reasons for the failure; that and “inefficiency.”
It’s a scam.
Think about it. The competition from the likes of Fed Ex, Yahoo and on-line bill paying and banking is not new. And automation has made mail handling steadily more efficient. Why is the postal service suddenly broke?
Because a Republican Congress wanted it to be broke, and in 2006 required the USPS to pre-fund postal retiree health benefits for 75 years into the future, a burden no other public or private company is required to carry. Payments of $11.6 billion are due now on those obligations imposed by Congress.
Why would anyone want to intentionally bankrupt the USPS?
The answer is so that a crisis can be created, like the fiscal cliff, to justify “reforms” that are in the interest of the 1 percent who now own much of the Congress and most of the wealth of the Unite States, and would like even more.
If the post office can be privatized, one more union can be reduced; another cherished goal of that part of the GOP which is funded and cheered on by the likes of the Scaife Foundation, the Carthage Foundation, and the Charles G. Koch Foundation.
There is already in place what amounts to a business plan to privatize the USPS, written by the pro-privatization American Enterprise Institute in 2011, called “Return to Sender: Reforms for the Failing Postal Service.”
And on cue as Congress got back to work (Well, got back to Washington, anyway), another “independent” think tank stepped up to undertake a study of how the USPS can be “reformed” in a “public-private partnership.”
This time the effort is fronted by the National Academy of Public Administration. Its study team will be led by David M. Walker, who is the former president and chief executive officer of the Peter G. Peterson Foundation. Peterson is a retired Wall Street baron who now leads the cheerleaders of Team Wall Street and the calls for “fiscal responsibility.”
Translation: cut Medicare and privatize Social Security.
But, you say, OK, I understand that many Republicans and even Wall Street New Democrats in the Obama Administration want to further reduce unions and privatize America. But you ask, why would anyone want to buy an enterprise doomed by the competition of new technologies?
The answer is real estate.
The USPS reports owning more than 8,000 properties (including over 300 million square feet of interior space), and about 500 acres of undeveloped land. Most of that is prime real estate in downtown locations all across the United States.
How much is all of that worth? One of the reports supporting privatization put the “book value” at $15 billion. This puts the actual sale price at about $105 billion.
As Andrew Reinbach observed in an analysis published on Huffington Post, “Privatizing the USPS has the potential of being one of history’s biggest — and most profitable — real estate deals ever.”
He explained how the deal would go down.
“When the USPS becomes a private, investor-owned corporation, it would be split into two entities, an operating company that handles mail and packages, and a separate company that owns the real estate. The real estate company would then sponsor a series of vehicles — real estate investment trusts, probably, or even limited partnerships — each appealing to a specific subset of investors.”
Enter Wall Street.
“These in turn would lease some of those properties back to the USPS, and lease or sell others. That first would increase the operating expenses of the USPS, but also reduce its taxes, since leases are tax deductible. It would be sold as a way to subsidize the operating company, preserving universal mail delivery, jobs, and benefits.
“Then the real estate companies would take the cash flow from the USPS lease payments, and the other lease payments, and turn it into bonds.”
More Wall Street.
“Since the leases would be on commercial real estate, the income would be sheltered from taxes for years, because as commercial property, it could be depreciated. When the bonds matured, the company could lease the properties all over again, or sell them. The properties not treated this way would either be sold, re-developed, or re-developed and then sold.”
And if the operating company eventually collapsed, well that’s just too bad for the unionized workers. “After all, it was a sinking ship, but we tried,” the privatizers will say.
But as Reinbach points out, “The real estate company wouldn’t sink. And the deal could be used as a template for other privatizations.”
Your local school district, for instance. Lots of real estate there, too.
Mike Krauss is a former officer of Pennsylvania county and state government and chairman of the Pennsylvania Project. www.papublicbankproject.org Email: email@example.com
Editor’s note: Part 2 of four on privatization: Tuesday, infrastructure; Wednesday, Social Security.