The recommendations detailed in a long-awaited Task Force report released by the U.S. Department of the Treasury to overhaul the United States Postal Service’s (USPS) business model offer both opportunities and challenges for taxpayers, according to National Taxpayers Union’s analysis.
In simplest terms, NTU wholly agrees with Secretary Mnuchin’s assessment that American taxpayers face “significant financial risk” due to the “unsustainable financial path” established by the USPS. It is refreshing for the government’s top financial official to acknowledge that in an era where entities like Fannie Mae and Freddie Mac have received taxpayer bailouts, USPS could be next. Despite maintaining a government-sponsored monopoly over the delivery of traditional mail, USPS is nearly bankrupt, having lost nearly $70 billion since 2000. With steep losses, as well as unfunded liabilities totaling $120 billion, it shouldn’t come as a surprise that this agency consistently receives a “high risk” label by the Government Accountability Office.
And in a recent NTU op-ed for Townhall regarding USPS’s $3.9 billion loss for 2018, we noted: “Taxpayers have a direct stake in many aspects of USPS, including operations, personnel compensation policies, and infrastructure acquisition. All of the decisions associated with these practices can impact the long-term financial health of USPS, impacting the likelihood that taxpayers may be unfairly saddled with liabilities the Postal Service is unable to pay.”
Although critics decry the new report’s emphasis on more cooperative relationships with the private sector as “privatization,” in reality the Treasury-led Task Force decided that the future viability of the Postal Service is not to pursue a model in which the entity becomes privately-owned. Instead, the recommendations seek to reinforce the USPS in its work to fulfill its mandate to “bind the Nation together” through quality, reliable service across the country.
The report rightly dismisses the notion that USPS should engage in banking activities, which would put too many Americans, as well as their deposits, into the hands of a government entity that has no experience in loan underwriting and doesnt even have its own financial accounts in order. Furthermore, it provides ideas worth considering to help the service maximize efficiency and revenue without hurting customers. Among these are relying more fully on providers outside USPS to assist in midstream mail processing, colocating facilities in establishments that consumers visit most, and calibrating delivery services to meet customers’ needs. The report also highlights actions USPS can take to curb rising labor costs to remain sustainable well into the future. And thankfully, the Task Force avoided schemes to effectively transfer USPS’s massive retiree health care liabilities onto the backs of taxpayers, or magically erase them from the Service’s balance sheet.
Yet, several issues will remain contentious, especially those involving legislative rather than administrative action. Clarifying and strengthening the managerial and oversight powers of the Postal Board of Governors and Postal Regulatory Commission will require Congress’s help, starting with what could be a contentious confirmation of new Governors. At the same time, pressure among lawmakers to foist USPS benefit liabilities upon the Treasury will remain high. Furthermore, USPS’s internal cost accounting and allocation procedures have been problematic for decades, transcending the current political environment. Implementing the Task Force’s recommendations in this area dispassionately and judiciously will require the utmost care to avoid allegations that they are tilted toward one or another particular outcome.
In response to the Task Force’s recommendations, NTU President Pete Sepp, stated: “It is now up to both the Executive and Legislative branches to carefully study and determine which of the Task Force’s recommendations have the most promise to protect taxpayers while benefiting postal customers. This process will not be simple or easy, but it cannot be avoided. Postal reform will happen one of two ways: it can take place deliberately and deliberatively, or it will take place haphazardly in a crisis environment. Policymakers would be wise to choose the first path now rather than be confronted with the second path later. Indeed, ‘later’ is no longer far away.”