Perennial Losers
November 14, 2010 by Website Administrator
There’s a lot of interest in identifying specific areas in the federal budget that could be cut or pared down. With many ideas floating around, perhaps Congress should consider restructuring or privatizing those businesses it controls that lose money on a consistent basis. The biggest one is of course the two housing giants, Fannie Mae and Freddie Mac – currently costing the more than $150 billion with potential to add another $135 billion if the economy continues to struggle. While not on quite the same scale, other government-run businesses that lose money year after year are just as troubling. For example, the Post Office and Amtrak are both perennial black holes in the federal budget with no end in sight.
The US Post Office is not much better off. Just a few days ago, they reported a larger than expected $8.5 billion loss for 2010 and a projected $5.5 billion loss for 2011. A main driver of the losses appears to be retiree health costs; more generally though, the USPS suffers from bureaucratic management inherent in a government-run business.
Today’s fiscal crisis might be just the catalyst for kicking to the curb government-run businesses that have shown little ability to outperform their private counterparts in anything but annual operating loss.
