Freedom Line Blog

Earlier this month, the United States Postal Service (USPS) released its latest financial report for the first quarter of the 2018 fiscal year, and its latest loss amounted to $540 million.  Considering the USPS’s pronounced downward fiscal trends over many years, this issue maintains paramount importance in the effort to reform government and restore fiscal sustainability.

By way of background, the USPS continues to operate under the 2006 Postal Accountability and Enhancement Act (PAEA).  Since that time and despite the PAEA’s mandates, however, the Postal Service’s leadership has not emphasized fiscal accountability by any measure whatsoever.  Since the start of 2007, losses accumulated by the USPS now amount to $65.6 billion.

With such immense losses detailed by the USPS, it’s indefensible that federal regulators and lawmakers haven’t meaningfully demanded that it control its costs.  Without any clear direction to reign its spending, the Postal Service’s expenses from all operations have grown precipitously from $66.3 billion in total costs in 2014 to $70.5 billion spent in 2017.

Fortunately, the arrival of the Trump Administration last year prompted a campaign of close review and positive restructuring of many facets of the federal government.  In that continuing effort, the USPS, with such severe fiscal problems, offers an ideal entity to address in 2018.

Indeed, during the holiday season President Trump touched on one key postal management issue that deserves particular focus this year – the USPS’s arrangement to undercharge Amazon for completing a large segment of its deliveries.  While the Amazon deal certainly translates to higher package volumes, USPS has a responsibility to the taxpaying public to ensure that it’s making enough to cover its rising costs.

As the costs of providing traditional letter mail service remain relatively flat, the USPS’s rising outlays have been driven through the pursuit of a variety of experimental products areas.  That includes attempts to enter specialized markets like weekend package deliveries, same-day deliveries, and also handling groceries.   Therefore, returning the USPS to a stable fiscal state depends heavily on simplifying what the organization is doing and maintaining an emphasis on core competencies.  Additionally, lawmakers and regulators can only help make these determinations if the USPS is forthright about the financial health of each individual line of service.

Accordingly, CFIF urges for a sensible approach where leaders in Congress and the Administration call for much greater transparency from the USPS.  The agency’s past attempts to grow its footprint and duplicate services already available to consumers has not been a recipe for success.  Identifying where the USPS remains profitable and where it loses money must ultimately become a more simple and straightforward process, and the time for reform is now.

Hat tip to Rep. Darrell Issa (R-CA) and his staff at the House Committee on Government Oversight for sharing this “Myth v. Fact” explanation via email of the USPS’s alleged overpayment into the federal retirement system.

Myth: The Postal Service has overpaid by $50-$75 billion into the Civil Service Retirement System and Congress owes this money back.

Fact: There is no Postal Service overpayment.

The United States Postal Service was created in 1971 from the old Post Office Department in order to provide better mail delivery and let it act more like a business. In 1974, the Postal Service agreed to a formula to share the retiree costs of individuals who worked for both the Post Office Department and the Postal Service, calling it “proper, as a matter of principle.” Now, with revenues declining, the Postal Service argues that that formula is unfair. The Postal Service argues that if a formula it considers to be fair had been used instead, then it would be owed $50-$75 billion by the US Treasury.  This is an attempt to rewrite history. The original formula was instituted as part of a broader set of decisions concerning the creation of USPS.  For instance, those decisions included not charging any fee to USPS in return for the postal monopoly it was granted.  Another reason why it makes little sense to speak of an overpayment due to USPS is that the Postal Service had a clear requirement from 1971 until 2006 to raise postage rates to cover all costs, including its cost of retirement funding.  If a different formula had been used all these years that had resulted in lower annual payments by USPS for its federal employee retirement costs, those savings would have been used to lower the cost of postage rates.

Issa’s postal reform bill is up for consideration in a congressional subcommittee today.  You can get more information on his version of postal reform at this website.

For my fellow limited government types out there, here’s an idea to save money and get the decennial census done competently: hire postal workers to count heads.  The suggestion comes from one of the Census Bureau’s “seasonal” workers quoted in the New York Post.

I am totally convinced that the Census work could be very easily done by the US Postal Service.

“When I was trying to look for an address or had a question about a building, I would ask the postman on the beat. They knew the history of the route and can expand in detail who moved in or out etc. I have found it interesting that if someone works one hour, they are included in the labor statistics as a new job being full.

Yes, you read that last sentence correctly.  Whenever the Census Bureau hires a person for at least one hour of work, they can report to the Labor Department that a new job has been created.  And that’s true even if the one-hour worker gets fired and rehired multiple times – multiple hires equal multiple “jobs.”  Our tax dollars at work.  (Or, is it play?)

With these facts, it seems like the census could be achieved much more efficiently by getting the postal worker on the street to knock on the door, deliver some mail, and casually ask how many people live in the unit.  Since people are already comfortable with their usual postal worker, having them ask the questions would be much more likely to guarantee a response.  And, it would save taxpayers the indignity of funding inflated job creation numbers.