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U.S. Postal Service Reports Continued Losses … Will Taxpayers be Next? Citizen Group Calls for Action from Congress

by Pete Sepp / /

Today the United State Postal Service (USPS) announced another massive loss in its second quarter financial report totaling $562 million, reigniting concern from the nonpartisan National Taxpayers Union (NTU) that many proposals in Congress for postal reform will fall short of addressing the Service’s structural problems. NTU President Pete Sepp offered the following statement in response to the latest financial data:

“From health care to telecom to travel, consumer issues are all over the news … and, as a result, Members of Congress are trying to make news of their own by talking about pet reforms. One urgent consumer matter that ought to be generating more news  -- and more serious attempts at reform from public officials  -- is the dire financial condition of USPS. This issue has long concerned National Taxpayers Union’s members as well. Given the Postal Service’s precarious position, unless Congress focuses now on serious, structural remedies that emphasize transparency, accountability, and sustainability, taxpayers will be on the hook for massive liabilities. That hook could be threatening Americans’ wallets sooner than they think.

Over the last decade, USPS has ended each year with a multi-billion dollar loss. In fiscal year 2016 alone, the U.S. Postal Service lost $5.6 billion and the latest reports this year show that the trend remains alarming. Even as USPS attempts to spin the latest news as less terrible than in 2016, a closer look at the numbers is troubling. The Service once again blamed expiration of a postage surcharge on a loss of controllable income, a surcharge that  had already been extended and was no longer justified. Meanwhile, controllable expenses still rose.  In an effort to defend ongoing financial mismanagement, USPS promotes its growing revenues for various parcel products, but even this could not hide a net decline in operating revenues.  The chronic shortfalls could indicate, among other things, that the costs associated with bloating USPS’s base of services to include parcels have become too much to offset. Unfortunately, because of the Service’s opaque accounting, it had proven difficult to pinpoint the problem.  

The Postal Reform Act of 2017 needs much more work if it is to stand a chance of sufficiently resolving these longstanding issues. Shifting employee benefit liabilities to Medicare, restricting consolidation of unneeded facilities, and encouraging the development of even more non-core services won’t reduce the threat of a taxpayer bailout over the long-term. Clear day-to-day oversight is needed to help restore the quality and affordability of postal service. To that end, the U.S. Postal Service Board of Governors has become vacant, and thus ineffective, pointing to a clear need for the Trump Administration and Congress to confirm new members to the Board who can help resolve the organization’s fiscal turmoil. NTU has recommended other reforms in policy briefs and in comments to the Postal Regulatory Commission.

Many thoughtful analyses have shown that USPS is long overdue for a major reorganization to improve its financial position and its overall service performance. As we move ahead, leaders in Washington must prioritize real postal reform and the broad review of the postal rate making system.”

Note: NTU has worked in Congress on postal issues for more than three decades. Additional information is available online at ntu.org.