We certainly admire the U.S. Postal Service for its many years of service and delivering mail and packages. It employs many dedicated people, offers good pay and benefits, and has carried out its task with pride and diligence.
Unfortunately, the U.S. Postal Service operates at a loss. A mammoth loss. A loss that, in the private sector, would likely mean closing shop. But this is government, which means we’re talking about taxpayer money, which means those operating loss are far more acceptable and by some, simply brushed aside.
The Postal Service on Thursday reported a quarterly loss of $2.1 billion, compared to a $1.6 billion loss in the same period ending June 30 last year. That came after double-digit growth in package delivery was unable to offset drop-offs in letter mail, which makes up more than 70 percent of total postal revenue.
Quarterly revenue came to $16.7 billion, a decline of $1 billion from the same period last year.
The news actually gets worse.
The U.S. Postal Service warned Thursday that it will likely default on up to $6.9 billion in payments for future retiree health and pension benefits for the fifth straight year, citing a coming cash crunch that could disrupt day-to-day mail delivery.
The service said it expected cash balances to run low by October and to avoid bankruptcy would likely not make all of its payments as required under federal law. Postmaster General Megan Brennan stressed an urgent need for federal regulators to grant the Postal Service wide freedom to increase stamp prices to help cover costs, citing continuing red ink due to declining first-class mail volume and the expensive mandates for retiree benefits.
That won’t be the first time it has tried to slow the negative cash flow.
The Postal Service has already defaulted on $33.9 billion in health benefit pre-payments.
To avoid bankruptcy, the post office has defaulted on the multibillion dollar health prepayments each year since 2012.
The financial health of USPS gets worse, again.
According to a 2017 Fortune 500 article: “Robert Shapiro — former Treasury undersecretary and chairman of the economic consultancy Sonecon — points out in a new analysis, American taxpayers subsidize the USPS at a rate that surpasses the costs associated with any Congressional mandate. He estimates that, all told, the subsidies and legal monopolies that Congress bestows upon the post office is worth $18 billion annually.”
Left unresolved, the rapidly growing debt means that American taxpayers eventually could be forced to cover the massive costs when future postal retirees seek to cash in on the benefits to which they are legally entitled.
The Postal Service goes back many decades of folks dressed in crisp, blue and gray uniforms. We appreciate its efforts.
To this day, many USPS employees have served their communities well and they deserve appreciation.
But the mailing of letters is a lost and dying art. UPS and Federal Express have large shares of the package delivery market. That usually leaves the Postal Service to deliver millions of pieces of advertisements, commonly referred to as junk mail, to increase revenue. It’s not enough.
The Postal Service, an independent agency of the U.S. federal government, has long been, is and will continue to operate at a loss. Again, if this would a private company, that’s fine. When it’s a government-funded operation, meaning your tax dollars are at work, there must be more accountability. There must be more transparency to the public how this is going to change. Someone should say, enough.
Of course, it won’t be USPS. When most folks see a $2 billion quarterly loss, there might be despair. USPS sees the numbers we’re looking at and finds reason for optimism.
“Today’s financial report shows the underlying business strength of the U.S. Postal Service while also indicating the need to address external matters beyond USPS control,” said Fredric Rolando, president of the National Association of Letter Carriers.
Come again? A report that shows a $2 billion quarterly loss indicates business strength? Well, it could be in there in the fine print.
What could turn things around?
It would help if the Postal Regulatory Commission lifted a rate cap that restricts stamp price increases to the rate of inflation, and that could happen. A first-class stamp, at 49 cents, is a bargain.
The USPS would like to invest billions in new delivery trucks to take on UPS and Fed-Ex and fight for a larger share of package deliveries. With the growth of online shopping, package delivery services will be in demand and USPS might find some inroads.
The Postal Service is also urging Congress to provide relief from the mandate to pre-fund retiree health benefits. Legislation in 2006 required the Postal Service to fund 75 years’ worth of retiree health benefits, something that neither the government nor private companies are required to do.
All these partial solutions — raising stamp prices, investing in more delivery trucks, and relief from the mandate to pre-fund retiree health benefits — could happen. But even if they do, it won’t be enough. Not even eliminating delivery on Saturdays would be enough.
Taxpayers fund government. We get that. And USPS has generally operated in the red, even before email, even before UPS, even before texting and cellphones. But, taxpayers should eventually be relieved of continually funding a government agency that has lost billions and will lose billions more and does not have a reasonable path to solvency.