Another Quarter Gone, Another Billion Dollar Loss for the Postal Service
May 11, 2015
Another fiscal quarter for the United States Postal Service (USPS) has come and gone, and unsurprisingly, the outcome has proven more of the same. After maxing out their $15 billion line of credit with the U.S. Treasury and sustaining $50 billion in losses over the last eight years, there is no end in sight to USPS’s financial decline.
The latest quarterly deficit totaled $1.5 billion, which means they are now more than $2.2 billion in the red for 2015 and yet are still continuing to operate beyond their means. With these figures, the U.S. Postal Service has run a deficit in 24 of the past 26 quarters.
The agency was originally created to provide letter mail delivery service to everyone in the country, no matter where they live, at a reasonable rate. Delivering letter mail represents the core function of the Postal Service. According to their most recent Annual Compliance Report, standard mail letters and first class mail both cover their costs by more than 200 percent. Instead of focusing on money-losing ventures like deliveries of flowers and groceries, the U.S. Postal Service needs to focus on their main responsibility – mail delivery.
The Postal Service’s financial management strategy to spend their way out of debt hardly seems viable. It is very difficult to make sense of this, and now the agency is seeking to become a financial institution by potentially expanding into banking.
Supporters of the Postal Service claim that they do not use taxpayer funds and that they operate off of revenue generated from products and services like stamps. A recent report by economist Robert Shapiro shatters this myth. According to the report, the Postal Service actually receives $18 billion in subsidies from the U.S. government, including a generous interest rate on their outstanding debt. Nonetheless, one would be hard pressed to find a business that would be able to keep the lights on while losing money at a similar rate.
Now, the U.S. Postal Service is looking to purchase a new fleet of vehicles. Unlike the postal vehicles we see on the road today, they are seeking larger trucks to better handle services beyond their core function of delivering the mail, like package and even grocery deliveries. The price tag for the 180,000 new trucks is projected to be $6.3 billion. After running quarterly deficits for so long, the question must be asked as to where they will get the money to pay for the new trucks.
When the U.S. Postal Service can’t pay its bills, taxpayers will be on the hook to bail them out. It is time for serious reform so the USPS can better manage its finances. More of the same is not the answer.