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: mike@mikekrausscomments.com
Editor’s note: Part 2 of four on
privatization: Tuesday, infrastructure; Wednesday, Social Security.
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