The US Postal Service recently announced a $15.9 billion loss for fiscal year 2012. Meanwhile, FedEx had an operating income of just over $3 billion and net income of about $2 billion, and UPS is on track to be slightly more profitable.
I'm constantly seeing ads on TV and elsewhere for shipping services via USPS. But clearly they're losing in the marketplace for shipping. And that's fine, in a way. We don't really need the USPS to make money. But it would be nice if it lost less, and there's a really simple way to do this: cut it down to size.
Do we need a government-run postal service that ships packages of all shapes and sizes to every zip code in the country? We already have privately-run companies that do this just fine and do it profitably. I get that for social cohesion it's useful to have a postal service for letters (although that's less and less obvious given the fact that even email, which has been killing postal mail for years now, seems antiquated in these days of Facebook and Twitter).
The USPS needs to do what any company deep in the red does: cut back to its core competency. This is going to be very hard to do, though, because it can be endlessly subsidized by the taxpayers. It won't have to go through bankruptcy reorganization. It's not even a "public-private partnership", a la FNMA.
This would be a perfect time to shrink the USPS, though: its raison d'etre is going away, it's losing money, and we as a nation are going broke. But I don't imagine for a second that it'll happen, for all the usual reasons: too few people care too little about shrinking it, and the few who really don't care a lot. Repeat this a few hundred times and you have a trillion dollars in annual deficit.