Through rain, sleet, snow, the mail is delivered and I am truly grateful for the men and women of the US Postal Service (USPS). However, I must admit to being alarmed at the fiscal management of the organization.
According to The Hill, “The USPS lost $1.9 billion over its most recent quarter, despite bringing in more revenue during that three-month span. The red ink means the cash-strapped agency has now lost money in 20 of the last 22 quarters. In all, the agency lost some $2.2 billion in the first six months of fiscal 2014, through March 31.”
This is the frustrating aspect of the federal government. It is an entity that demands more taxpayer resources, yet squanders the money, often with no explanation. Case in point — as we reported here — the $6 billion lost by the US State Department over the last five years, which cannot be explained. I think we all remember the strenuous machinations and alarm touted by the Obama administration over the “sequestration” cuts (which our lawmakers have somehow lifted), but in any event Armageddon never arrived.
As The Hill reported, postal officials again cited the losses to press lawmakers to enact a comprehensive overhaul of the agency, which has now lost more than $23 billion over the last two and a half years. In its statement, the USPS said that first-class mail volume dropped roughly four percent in 2014’s second quarter, a continuing result of the rise in electronic communication. The agency added that it would not be able to pay a scheduled $5.7 billion payment for future retirees’ healthcare due in September, the fourth such bill it would default on in recent years.
Can any of you imagine what would happen in the private sector if a business lost $23 billion in two and a half years? I think the Board of Directors would have made some changes in leadership immediately. And what about innovation? Instead of complaining about the rise of electronic communications, where is the visionary leadership in the USPS?
Private-sector companies seem to be able to figure that out. In the first quarter of this year, the operating profit for UPS (the folks in brown) was up $1.5 billion and the company generated $1.9 billion in cash flow. In a nutshell, UPS earned what the USPS lost.
And this is what angers American taxpayers. Accountability and responsibility is demanded in the private sector, but seems optional in the federal government.
However, Joseph Corbett, chief financial officer of the USPS is speaking up. “We haven’t been making the retiree health benefit prefunding payments because we can’t, he said in a statement, “If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much needed capital into our business. Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over our personnel and benefit costs, and more flexibility in pricing and products will provide the necessary cash flows.”
Which sounds like prudent market-based solutions to me. What are your recommendations for improving the solvency of the USPS? And more than that, what are your recommendations for ending wasteful government spending and massive losses?