U.S. Postal Service is Dying, Why You Should Care

The USPS has been teetering on the brink of bankruptcy. A key reason was a 2006 law that required the postal service to make annual payments of about $5.5 billion for 10 years to pay for future retiree health benefits.  …

In the three months that ended June 30, the agency reported net losses of $5.2 billion.

via CNN.

People like to point out why the post office is suffering a slow cancerous death.  eMail, electronic bill pay, faxes, etc.  But that’s all garbage.  The U.S.P.S. is dying because it failed to meet the realities of the marketplace and because it overpays it’s workers,  a/k/a  bad management.

Compare the USPS which LOST $5.2 billion in the 2Q 2012 to UPS which made $1.12 billion in the same period.  Or FedEx which made $459 million in the 3 months ending 08/12.

Years ago I read Jim Rogers‘ book Investment Biker.  In it he tells the story of being in the USSR and mailing some packages back to the UK.  Long story short, the communist government charged less to mail letters and package than it cost.  This was because it was popular with the people.  The people wanted to be able to send letters cheaply and the government obliged.  But it was but one example of several (cited in the book) showing how and why the USSR would fail.  A government cannot continue to offer services for less than what they cost.

No entity can continue to offer services for less than their cost.  The USPS is not exception.  It must either figure out how to charge enough for the service it provides or get out of the business.  But right now the taxpayers are on the hook to massive amounts of USPS debt.  That’s not right.

Lastly, you should care… greatly.  The government is now just starting to take over the nations health care.  It too will be run with the same level of efficiency and forward thinking as the USPS, or maybe the State of Illinois DMV.

Health care in this country will follow the USPS in bankruptcy.  And that’s not going to be good for anyone.

Businesses Expanding but Not Hiring

A majority of owners of midsized businesses in the Chicago area plan to expand in the next three months, but only a third say they will hire more workers in that time, according to a new survey.  …

The most recent poll … found that nearly 60 percent of surveyed businesses planned to expand in the next six months. …At the same time, just 30 percent plan to add staff in the next three months. In the spring survey, 42 percent said they planned to hire soon.

via Crain’s Chicago Business.

Businesses are terrified of the government.  So what do they do?  More as slowly as possible.  Hire as few as possible.  Be as conservative as possible.  Because the G is going to come and screw you up real bad at any minute.

Business are terrified of Obamacare.  The costs associated with bringing on new people is dizzying.  Hire someone today and down the road you may just have to fire them because their health care costs are out of control.

Running a business is hard.  Really hard.

Any business that tells you that they”could use “help from the government” is so big that they are fully in bed with the government.  Much like GE, or GM.  Recall that GE paid no taxes on $14B in income in 2010.  The GM fiasco speaks for itself.

The life blood of this country is in the small and medium sized businesses.  Right now these businesses are sick and we’re not nurturing them the way we should.  But they future is our future.

This country is heading in the wrong direction.

100 Days Until Taxmageddon

Sunday will mark the start of the 100-day countdown to “Taxmageddon” – the date the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2013:

via Americans for Tax Reform.

Here’s a list of some of the new and raised taxes coming:

First Wave: Expiration of 2001 and 2003 Tax Relief

  • Personal income tax rates will rise on January 1, 2013.
  • Higher taxes on marriage and family coming on January 1, 2013.
  • Middle Class Death Tax returns on January 1, 2013.
  • Higher tax rates on savers and investors on January 1, 2013.

Second Wave: Obamacare Tax Hikes

  • Some Obamacare have already gone into effect: tanning tax, medicine cabinet tax, HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”
  • The Obamacare Medical Device Tax
  • The Obamacare Medicare Payroll Tax Hike
  • The Obamacare “Special Needs Kids Tax”
  • The Obamacare “Haircut” for Medical Itemized Deductions

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

  • The AMT will ensnare over 31 million families, up from 4 million last year
  • Full business expensing will disappear
  • Taxes will be raised on all types of businesses
  • Tax Benefits for Education and Teaching Reduced
  • Charitable Contributions from IRAs no longer allowed

… So at least we have that to look forward to.  Right?