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TPA Releases Statement on USPS Second Quarterly Report Showing $2 Billion Loss

David Williams on May 10, 2016

United States Postal Service Lost $2 Billion in Second Quarter of 2016
Second Quarterly Report of 2016 adds to need for USPS to get serious on meaningful reforms

WASHINGTON, D.C. – Today, the Taxpayers Protection Alliance (TPA) expressed concern about the continuing financial death spiral of the United States Postal Service (USPS).   Today’s reported second quarter loss of $2 billion indicates that it’s business as usual when it comes to USPS’s fiscal predicaments. The $2 billion loss for this period adds to the mountain of debt that the Postal Service has amassed.  USPS has lost $36.6 billion in the last five years and has $116 billion more in unfunded liabilities on its books when also taking into account a $15 billion liability with the U.S. Treasury.  As a part of this, USPS is neglecting to pay its $1.4 billion retiree benefits payment for the quarter despite the agency's legal obligation to do so.  TPA is also concerned that taxpayers will be asked to bail out the agency should their financial situation worsen, which becomes an even greater possibility with each multi-billion dollar quarterly loss.

USPS has been using a litany of excuses for their poor performance.  For example, USPS officials cite the effect of the recently expired exigent surcharge that the Postal Service has been able to tack on to the price of stamps. USPS officials claim that without the extra charge, the agency will lose an additional $2 billion per year.  While the Postal Service’s management claims that yet another renewal is wholly necessary, a closer look at the situation reveals that a continued rate hike is nothing more than a financial crutch.

In fact, the exigent rate increase is only supposed to be an option of last resort for the most dire of circumstances facing USPS. These dire conditions, as USPS has claimed for years, comes as a result of the great recession of 2008. Common sense dictates that the aftereffects of 2008 were certainly troubling, but continuing to cite it now is dubious at best, which is exactly how the U.S. Court of Appeals ruled against USPS a year ago when they sought to make the rate permanent.

Seeking to gouge consumers in this way is also disturbing considering that the letter mail products that the rate hikes apply to are among the agency’s most profitable. Letter mail services often turn in greater revenue compared to cost at more than a 2 to 1 ratio, while package services are struggling to break even or are continuing in the red.

A closer review of the services that cost a great deal to provide, without producing enough revenue, is sorely needed. Delivering letters certainly fits the bill for USPS, but it is truly a wonder why so many unprofitable parcel offerings, grocery deliveries, and other diversions continue to be force-fed to consumers.

Not only is USPS ignoring the fiscal realities of their mess, they are also speciously optimistic about their “controllable income,” an accounting methodology that is unknown to everyone outside the organization’s management.  In a November 2015 interview with the Associated Press, USPS Chief Financial Officer Joseph Corbett said that, "Without the surcharge, for example, in 2015, we would have recorded a controllable loss of $800 million, not income of $1.2 billion. Also, our costs continue to escalate."  This is a troubling statement and should debunk the myth that “controllable income” shows an improving financial situation.

Without answers and immediate action by USPS, its fiscal chaos will continue and further extend the possibility that taxpayers will need to rescue the agency with a bailout. TPA continues to call for more leadership and accountability at the agency, more action on seating a full Board of Governors, and real effort towards meaningful reforms that will save money, and improve efficiency and service.

Click here to see a pdf of TPA's statement