A red-ink-drenched postal service
November 5, 2019
This article originally appeared in the Washington Times on October 31, 2019.
For the American people, the frights won’t stop after Halloween is over — thanks to the most mundane of federal departments, the United States Postal Service (USPS). In the coming weeks, the red-ink-drenched agency will reveal to the public how much money it lost in the past year.
It’s certain to be a nightmarish number, since the USPS has lost around $70 billion since 2007 and the agency is facing the uncertainty of new leadership after its postmaster general recently called it quits. That horrifying debt is only set to grow, too, unless the USPS can conjure up a business plan to get back on track. And who will be on the hook with higher stamp prices and bailouts?
Well, it’ll be the U.S. taxpayer. Scary, no?
The federal government isn’t known for streamlining and fiscal responsibility, but the USPS stands out in particular for its sorry financial record. Some may not want to acknowledge it, but the USPS will likely run out of cash by 2024 unless something is done to turn the ship around. In April, Postmaster General Megan Brennan told Congress that the USPS was busy working on a comprehensive, 10-year business plan, but the public has seen nothing more than an incomplete, leaked draft.
But by most indications, the USPS is piling on costs rather than making any real attempt to control expenses. In September, the Inspector General (IG) noted that “(inflation-adjusted) costs increased by $2.5 billion, or 6 percent” over the past five years, even as “mail volume decreased by 8.8 billion pieces, or 5.7 percent.”
The cost of getting letters and packages from Point A to Point B has ballooned an astounding 18 percent over the past 10 years, and even the IG struggles to explain this surge.
Clamping down on waste can prevent a full financial meltdown. Fortunately, agency watchdogs like the Taxpayers Protection Alliance (TPA) have nailed down some of the key cost drivers ailing the USPS. One gaping hole in accountability lies in the agency’s “middle-mile,” aka mail sorting and long-haul deliveries to local post offices.
Before mail is delivered to households and businesses, it often travels cross-country in large trucks operated by USPS contractors. These haulers systematically overbill the USPS and/or miss pivotal delivery deadlines. A 2019 TPA report found that, if the agency cracked down on this billing malfeasance, USPS could save more than $1 billion annually.
Unfortunately, billing problems and fraud extend far beyond the middle-mile. Every day, Americans hear on the news about crooked USPS employees and contractors using the postal system to their own benefit. Employees have repeatedly dabbled in money order fraud, imprinting and monetizing money orders across several post offices across the country.
In the inspector general’s spring 2019 report to Congress, citizens also learned of a multi-year, multi-million dollar fraudulent billing scheme by a technology support service contractor. By replacing this disreputable company with a more honest contractor, the USPS saved more than $130 million over the life of the contract. But no one is quite sure about the extent of the fraud problem gripping the agency, and further attempts to study and crack down on the problem could save the USPS billions per year.
And those savings are just the tip of the iceberg. The USPS has 500,000 employees, but does an awful job at figuring out who goes where and when. The agency does have an “F1” scheduling tool that could clear up plenty of these decisions about how best to use personnel, but it’s inconsistently used across postal facilities. If the agency actually used its own efficiency tools, it could save nearly $500 million each year.
By targeting inefficiencies, the agency can afford to make critical investments in new equipment. 2019 has seen more than 25 mail truck fires, a dire sign that the agency must soon replace its aging fleet. The USPS is currently deciding which truck maker would give the agency the best bang for its buck, but the price tag for replacing 186,000 trucks will likely be north of $6 billion — and probably even more if it sticks with its preference for American-made, eco-friendly fleets.
To add to the frustration, the USPS constantly delays its deliberation, and recently kicked the can down the road yet another year.
Instead of ballooning costs with unnecessary add-ons, the USPS should focus on the basics — a functioning fleet that gets mail where it needs to go. And on a broader level, America’s mail carrier must begin making decisions with its consumers and taxpayers in mind. That means shooing away its policy poltergeists and finally embracing real transparency.