Americans can expect certainty when it comes to a lot of things, such as the United States Postal Service (USPS) delivering a letter or package in snow, rain, heat, or gloom of night. Yet taxpayers can also expect with certainty the USPS to deliver disappointing financial results year-in, and year-out. And this week, USPS again fulfilled that certainty by announcing a financial loss of $4.9 billion in Fiscal Year 2020, the 15th straight year of finishing in the red. For taxpayers concerned that they may soon be on the hook for another bailout of a failed enterprise, these results are disappointing - but not surprising. Congress must take action to enact comprehensive postal service reform to ensure America’s centuries old mail service can remain financially viable for years to come, without relying on a massive infusion of tax dollars.
While it is unacceptable for yet another annualized loss, there are some faint silver linings from this latest announcement. The $4.9 billion loss - though still large - is sharply lower than the $9.2 billion loss that was originally expected. Further, the Postal Service’s operating revenue was 5.3 percent higher than last year, driven largely by increases in e-commerce and marketing mail deliveries. It is unclear whether the high level of package delivery will continue for the foreseeable future and even the USPS notes this revenue stream has “begun to abate as the economy continues to recover and market competition intensifies.” Finally, overall operating expenses were down $343 million compared to the previous year, due in large part to a $3.5 billion decline in the category of worker compensation.
While those positives should be celebrated, taxpayers should be aware of many significant challenges that persist and impact the ability of the Service to turn a profit. Despite overall operating expenses coming in slightly lower than expected, many core expenses were actually higher. Certain compensation and benefits expenses not mentioned above managed to increase $1.4 billion, transportation expenses increased $838 million, retiree health benefits increased by $450 million, and other retirement benefits expenses increased by $412 million. Perhaps most problematic was the decrease in both revenue and volume of USPS’s monopoly on First-Class Mail, which saw revenue decline by $500 million, and volume by 1.9 billion pieces.
These challenges and opportunities should not take away from the pressing need for Congress to enact fundamental reforms to the entire postal system. Combined with the other consecutive losses, the USPS has lost almost $93 billion over the past 15 fiscal years. Due to these steep losses, alongside $140 billion in unfunded liabilities and general debt, the Government Accountability Office regularly labels this agency as “high risk.” Without structural changes, USPS will continue to rely on multibillion-dollar withdrawals from taxpayers in order to remain solvent. In fact, the GAO noted in a report from earlier this year that “USPS's financial viability has been on our High-Risk List since 2009 due to the need for action to address USPS’s poor financial condition. USPS cannot fund its current level of services and financial obligations from its revenues.”
For the last several years, NTU and other advocacy organizations have sounded the alarm bells that USPS would not be economically viable in the 21st century on its current trajectory. Unfortunately, as is sometimes the case in Washington, the alarms have not yet stirred elected officials to action. Despite this reluctance to tackle reform, NTU has proposed some ways to help rightsize the finances and return profitability to this broken agency. The recently-passed infrastructure bill has already put taxpayers on the hook for billions in unwarranted federal spending on USPS’s vehicle fleet. Congress must avoid running up the taxpayers’ tab even higher.
Nevertheless, the fight for a more efficient USPS continues. The American people deserve actual reforms and a clear path forward, not more red ink. We look forward to continuing our work with the Postal Regulatory Commission to achieve reforms that will put the USPS on a sustainable path forward while mitigating the possibility of a future taxpayer-funded bailout.