Will of the People

Heh. I know your reasons must be more complex than this, but I can't help reading the first bit as: "Here's a useful service that entity A is having trouble providing, and there's a useful service that entity B is successfully providing. I know the solution: have entity A provide both!"

More complex, yup. The USPS is suffering for a few different reasons; among them is a drop in general mail volume as people use email for everything. The USPS is constitutionally mandated (Ben Franklin's brainchild) because it's seen as a prerequisite to a democratic government; it has very special obligations so it functions as such. The flat rate and universal service requirements are expensive (no doubt more remote parts of the country as well as less populated areas would see much more expensive service in the private sector) and are more onerous than the regulations required of things designated utilities.

The USPS also provides package delivery and other services that compete with UPS/Fedex. If we want to keep the service running (and barring constitutional change, we are obligated to; we probably should want to anyhow given the soundness of the arguments that created it) we might need to experiment with the formula of its monopoly a bit. Closing PO stations will damage the system in terms of the universal service obligation.

Also, a few years ago Congress mandated USPS to pre-pay into a pension fund in a weird and expensive way, which is really the main source of its current troubles.