re: Is the USPS dying because it didn't recognize its real business?

Actually FedEx and DHL could not exist without USPS.

LINK

Do We Really Want to Live Without the Post Office?

The postal service is not a federal agency. It does not cost taxpayers a dollar. It loses money only because Congress mandates that it do so. What it is is a miracle of high technology and human touch. It's what binds us together as a country.

SNIP

When Donahoe testifies on Capitol Hill, as he has done several times over the past two years, to describe just how dire the postal service's situation is — losing $25 million per day! — he talks in even, polite tones. Because there he's not telling, he's asking.

Five hundred thirty-five members of Congress ultimately decide how to run the postal service: what it can charge for postage, which services it can offer, how it operates. Donahoe is the person who implements their policies, despite the postal service not being a federal agency or taking any taxpayer money; it runs solely on the postage it sells — or lately, doesn't.

Take the most contentious issue: the seventy-five years' worth of future-retiree health benefits that in 2006 a lame-duck session of Congress legislated the postal service prepay over the following ten years as part of a broad overhaul of the way the postal service operates. No other government agency must do this, and most private companies would have spread those payments over forty years. But the postal service was flush at the time, and Congress figured out that since health-care payments are counted as general government revenue, it could use them to prop up its own books. (Five-and-a-half billion dollars a year coming in from the postal service was $5.5 billion less Congress would have to cut elsewhere to remain budget-neutral, as the Bush administration was demanding.) But then the economy crashed and with it the amount of first-class mail being sent around the country. Suddenly a law designed to keep the postal service solvent in the long term began bankrupting it. Of the $15.9 billion the postal service lost last year, 70 percent — $11.1 billion — was in future health-care payments.

Today, at the National Postal Forum, Donahoe is not beseeching, he's selling. Forget finding new customers. He just wants to make sure he keeps those he already has. The big mailers before him employ 8.5 million Americans. That's almost three of every fifty American jobs. And the billions of insurance bills and catalogs and summonses these companies send every year pump $1 trillion into the economy.

In one session, a strategic business planner from the postal service asks for a show of hands from "all of those who think the postal service and industry is in a death spiral." A few honest palms dart up. The mailers want to know that Donahoe has a plan. They want to believe that Congress is listening. They want to be reassured that the post office won't abruptly fail.

SNIP

A week earlier, in March, Donahoe presented his reorganization plan to a highly skeptical Congress. The post office of the 1990s, even of the last five years — huge, capable of moving a piece of mail across millions of square miles in mere hours for a nominal fee, six days a week — cannot survive, he said. He wants to get back the $49 billion the postal service has already prepaid in health benefits, wants to manage his employees' health care. But much more, his plan calls for sizing the post office for today. That means cutting 120,000 more jobs, largely through attrition; halving the number of processing centers that relay mail across the country at often breakneck speed; and drastically scaling back the hours of thirteen thousand unprofitable local post offices. He would stop nearly all Saturday mail, and ease the rate at which first-class mail races across the country, because much of the paper we do send doesn't need to get there tomorrow or on Saturday. Give me the freedom to do that, Donahoe said, and the postal service can make a profit of $6 million per day by 2016.

His plan is to shrink the post office in order to save it.