Today, the United States Postal Service (USPS) announced a $4.5 billion loss in the second quarter of 2020. The financial statement resounds the alarms expressed by the National Taxpayers Union about the Postal Service’s failures to address its dire finances and the implications this may have for the taxpaying public. Years of agency mismanagement, coupled with the current economic crisis as a result of the COVID-19 pandemic, are likely to expedite the deterioration of USPS’s financial situation. This makes comprehensive postal service reform more pressing and urgent than ever before.
In response to today’s report, NTU Policy and Government Affairs Manager Thomas Aiello issued the following statement:
“Unfortunately every quarter seems to bring bad news and worse prospects at USPS. It seems the question is no longer ‘is the postal service going to have a loss?’ but ‘how bad will it be?’ The structural inefficiencies in USPS’s business model continues to drive operating costs higher despite slightly higher revenues. In Q2 of 2020, USPS had revenues of $17.8 billion, which is about $400 million more than Q2 of 2019. Unfortunately, over the same period, total operating costs increased by almost $3 billion.
While some may point to the pandemic as a reason for this dramatic loss, the data show the fiscal difficulties existed long before the current crisis ever began. In fact, according to USPS, the pandemic had little impact on these numbers, stating “since the Postal Service began experiencing the impacts of the pandemic in mid-March, the pandemic did not have a material impact on its second quarter results, although significant impacts are expected for the remainder of the year.”
For the past twelve years, USPS has experienced multi-billion dollar deficits totaling more than $75 billion. Worse yet, the Government Accountability Office (GAO) finds USPS’s unfunded liabilities and debt stands at $143 billion, which is double its annual revenue. USPS has also received the GAO’s “high risk designation” every year since 2009 due to the agency’s “deteriorating and unsustainable” financial condition.
Just as they were put on the hook for Fannie Mae and Freddie Mac, taxpayers have every right to fear a USPS bailout. Quarter after quarter, year after year, postal problems should have served as a warning to policymakers for greater cost transparency, more managerial flexibility, and restraint on compensation costs at USPS.
If there is any silver lining in these numbers, maybe Congressional lawmakers will finally realize the untenable position of USPS and get serious about implementing meaningful reform. That means finding new ways to raise revenues and reducing cost inefficiencies such as consolidating post office locations, adjusting delivery schedules, addressing compensation and benefit levels, and expanding private-sector partnerships. These reforms can be the foundation for putting the USPS on sound actuarial footing and make it a competitive business in the 21st century.
However, some members of Congress aren’t interested in any change and want to give USPS a $75 billion taxpayer-funded bailout. Simply handing the agency a check without tackling its glaring problems will only enable larger and larger losses of public money.
USPS needs real reform not more bailouts. So will Washington heed this latest wake-up call and finally take action?