Saturday, June 16, 2018

Alaska shipping boondoggle costs USPS tens of millions

In the soggy, unforgiving tundra on the shores of the Bering Sea, Royala Bell defrosts a rack of beef ribs for dinner in a kitchen that doubles as a bedroom for six of her seven children.

A dead owl lies on the floor, ready for her husband, Carlton, to defeather it for a headdress. Fish dry on a line out back, for the larder in winter. On a small counter are some of the groceries the Bells consume from the Lower 48: Sailor Boy Pilot Bread, potatoes, Kool-Aid, Aunt Jemima pancake mix and a can of Coca-Cola.

The U.S. Postal Service paid to ship the items on a turboprop bush plane to Hooper Bay, a small settlement of Yupik Indians on Alaska's western edge. The Bells brought them home on the back of their all-terrain vehicle from Hooper Bay's only grocery store. The 12-pack of Coke alone cost the Postal Service $21 to get here.

Under a federal program exclusive to Alaska, the Postal Service is responsible for shipping more than 100 million pounds a year of apples, frozen meat, dog food, diapers and countless other consumer items to off-road villages in the sparsely populated outposts known as the bush. Over three decades acting as freight forwarder, the agency has lost $2.5 billion.

In many ways, the Alaska Bypass, as it's called, keeps Hooper Bay and 100 other isolated areas in Alaska afloat. But groceries do not come cheap for Royala Bell, 43, and her neighbors, most of whom, like her family, survive on food stamps and federal subsidies.

"I think the food is too, too high," she said of the prices at the Alaska Commercial store in Hooper Bay, stretching her hands wide like an accordion. "It takes about $200 for a little tiny amount of groceries."

Rural Alaskans are not the only ones paying a steep price. The system cost the Postal Service $77.5 million just last year, agency officials said, with ordinary stamp-buying customers covering the tab, while a long line of commercial interests benefited, from the airline and shipping industries to rural grocery chains.

Retailers pay the Postal Service about half of what it would cost them to ship the goods commercially; the subsidy allows them to charge a hefty markup on a can of Coke, for example, in some cases 30 percent or more. The agency, by law, must pay private air carriers well above market rates in the only corner of the country where airline prices are still regulated.

In the name of families such as the Bells, the late Sen. Ted Stevens, R-Alaska, pushed an earmark through Congress 33 years ago aimed at helping his constituents back home. But today, the Postal Service is going broke. On Capitol Hill, this is the kind of federal spending lawmakers in Washington have said they will swear off in a time of austerity.

Despite critics' efforts, the Alaska Bypass has been untouchable. Tinkering with it would rankle politicians from other rural states who fear this could be the first step toward scaling back mail delivery to other far-flung places.

Royala Bell paid $15.15 for a 12-pack of Coke, which began its journey to Hooper Bay on a wooden pallet of beverages. The pallet cost the Postal Service nearly $3,200 to ship. In return, Alaska Commercial put about $485 in postage on the shipment, well below commercial rates.

Throughout history, the U.S. government has vowed to support Americans no matter where they live. But critics question whether covering the cost of shipments to Alaska should fall on the Postal Service, which is losing billions of dollars.

Alaska may be the least-populous state, with 732,000 residents, but its congressional delegation still carries weight and has swiftly beat back every attempt to wring savings from the program or shift its costs to the state.

When Rep. Darrell Issa, R-Calif., chairman of the House committee that oversees the Postal Service, proposed changes to the Alaska Bypass system in 2012, Alaska's two senators, Lisa Murkowski, a Republican, and Mark Begich, Democrat, lobbied senators from other rural states to leave the Bypass alone.

Issa has plugged on. At at a hearing on his bill in March, he and other lawmakers highlighted a report from the Postal Service inspector general, who suggested that Alaska build more roads so groceries could be delivered more cheaply by truck.

Rep. Don Young, R-Alaska, shot back, "That's the dumbest statement I've heard in my whole life."

Gov. Sean Parnell has appealed to House Speaker John Boehner, R-Ohio, to keep Issa's bill off the House floor.

As part of its obligation to provide universal delivery, the Postal Service ferries, flies, hovercrafts and even dispatches mules to a handful of other remote communities where letter carriers can't drive.

But only in Alaska do packages weighing at least 1,000 pounds — 930 pounds above the heaviest parcel post box allowed in the Lower 48 states — count as a universal service. Only in Alaska do flat-screen televisions, paper towels, charcoal grills, citronella candles and apples count as mail.

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