How to Fix the Postal Service?

This week, Bloomberg BusinessWeek put the financial woes of the U.S. Postal Service on its cover with a story titled “The End of Mail.” The dire plight of the USPS isn’t exactly news — it’s been losing money since 2006, including nearly $20 billion since 2007. But the cliff the agency has been driving toward is fast approaching. The agency is now almost $15 billion in debt. Unless the government steps in, it will default on $5.5 billion of retiree health-care costs in September. By October it will reach its legal debt limit, and by the end of the year, the USPS will be out of cash — insolvent and unable to operate.

So what to do? How do you fix a federal agency that, if private, would rank as the 29th largest company on the Fortune 500 list? It can’t just go away, can it? Consider a few stats from the BusinessWeek story:

Total mail volume decreased 20 percent from 2006 to 2010.

With 571,566 full-time workers, the USPS is the country’s second-largest civilian employer after Wal-Mart.

It operates 31,871 post offices, more than the combined domestic retail outlets of Wal-Mart, Starbucks and McDonald’s.

80 percent of the USPS budget goes to salaries and benefits.

Whatever the fix, saving the post office is going to take a dramatic overhaul, likely a combination of layoffs, closing locations and possibly changing its pricing model. Here are some solutions that are on the table, and one that isn’t really, but might be worth asking:

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