Time for the Postal Service to grow up
February 19, 2020
This article was originally published in the Center Square on February 5, 2020.
Parents of adolescents regularly find themselves in a familiar school-night scenario where they goad their kids to get their homework done, only to be met with pleas for continued procrastination. Of course, the chore only becomes more tedious as the hour grows later and teens only become more stubborn in their procrastination.
This situation should also be familiar to any observer of the United States Postal Service (USPS), which has procrastinated dealing with its $140 billion debt for more than a decade. And, just like a pre-teen desperate to elude responsibility for their actions, the USPS wants Congress to make its debts someone else’s (aka taxpayers’) problem.
The “USPS Fairness Act” (H.R. 2382), introduced by U.S. Rep. Peter DeFazio, D-Oregon, would excuse the agency from prefunding its employees’ retirement obligations. Lawmakers and USPS leadership may not want to hear it, but it’s time for the agency to grow up.
Like a kid on a shopping spree with the parents’ credit card, the USPS is running in the dark red. In fiscal year 2019, the agency lost nearly $9 billion. This was no anomaly – the USPS has been losing money for the past 13 years straight and is down nearly $80 billion since 2007. Ask the agency why this is, and they’ll wave their hands and play the victim card.
In its recently released five-year business plan, the USPS complains that, “Federal benefits programs as currently structured impose liabilities that we cannot afford to fund” and, “the current CPI-U price cap imposes strict limits on our ability to set prices for Market-Dominant products.” If the USPS actually cared about pricing reform, it would stop extending ludicrous discounts to “small” postage buyers that are, in reality, anything but small. And it would stop giving 60 percent discounts on package postage premised on unrealistic assumptions that packages cost next to nothing to ship.
The agency has a (seemingly) more compelling complaint about the “prefunding requirement” imposed by Congress under the 2006 Postal Accountability and Enhancement Act. Instead of funding retirees’ healthcare benefits on a pay-as-you-go basis, the USPS now has to preplan for these expenses and put aside financing ahead of time. Like any good parent, Congress forced the reckless agency to budget its allowance and be a little more careful with how it spends money. And like any mischievous adolescent, the USPS responds that if Congress could give them just a little more wiggle room, they’d be wise with their monies. But there’s good reason for Congress – and taxpayers – to not trust USPS leadership. Each year, the USPS calculates their “controllable loss” (which excludes “items outside of management’s control and non-recurring items”) and the results aren’t pretty.
In fiscal 2019, the agency faced controllable losses of $3.4 billion, a nearly 80 percent increase from last year’s total. Last year, the Taxpayers Protection Alliance did a deep dive into some of these costs within the agency’s control and found widespread waste and inefficiencies. From bloated middle-mile contracts to overpaying for mail trucks to improperly scheduling their employees, the USPS overspends by at least $3 billion per year. Turning around these poor spending decisions – rather than giving the agency a blank check to spend even more money – is essential for a mature, capable USPS.
By wiping the slate clean on retirement liabilities, Congress would simply give the irresponsible agency the green light to waste more of consumers’ and taxpayers’ hard-earned dollars. Excusing debt will simply create more debt, even if the USPS’ day of reckoning is set back a bit.
Instead of kowtowing to adolescent excuses and bailing the agency out, Congress must hold firm and demand that the USPS keep costs down. “The dog ate my business plan” just won’t cut it.