Today’s report makes clear that the financial crisis at the Postal Service is largely political in nature—and that the Postal Service is actually returning to health in operational terms as the economy improves. The deficit from postal operations declined from $4.9 billion in 2011 to just $2.2 billion in 2012.
The headline figure of $15.9 billion in losses obscures other key indications of improving financial health as well. Shipping revenues are up 8.7 percent – a positive sign for the future—while the decline of first-class mail (3.9 percent) has slowed and employee productivity is at a record high.
“Our employees have been more efficient than ever,” Postal Service CFO Joe Corbett told reporters in a conference call on Thursday.
Only 16 percent of the overall losses actually had to do with mail delivery. The Postal Service reported 2012 operating revenues of $65.7 billion and operating expenses of $67.9 billion. (USPS gets its revenue by selling stamps and other products; it has received no taxpayer money for 30 years.)
Those losses, in a still-weak economy, would be easy to weather—were it not for an external congressional action unrelated to mail delivery. The 2006 congressional mandate that the Postal Service—alone among all agencies and companies in the country—pre-fund future retiree health benefits accounts for 80 percent of all Postal Service red ink, including $11.1 billion in 2012.
The mandate has depleted Postal Service funds, forcing the USPS to give up any quarterly or annual profits, empty its bank accounts and exhaust its borrowing authority —not to modernize its vehicle fleet but rather to satisfy an unfair political mandate.
Without pre-funding, the Postal Service would have tens of billions of dollars in the bank, a full line of credit, and would be able to focus on the transitions required by an evolving society.
While the Internet poses challenges, with more people paying bills online, it also presents opportunities, with more people ordering goods online that need to be delivered.
The irony is that the Postal Service already has $47 billion put aside for future retiree health benefits—enough to pay several decades of future retirees, something no other company can say.
The pre-funding mandate is a problem that Congress created, and which Congress should fix. It would be absurd to dismantle the universal network and degrade service to the public and to businesses—when almost all of the red ink has nothing to do with those services but stems directly from the external burden imposed by Congress.
Rather than rushing through a flawed bill in a lame-duck session, the new Congress should start over in January and develop constructive legislation that fixes pre-funding. That would eliminate the biggest drain on postal finances. It also would relieve the crisis atmosphere, letting the postal community focus on developing a forward-looking business plan that takes advantage of opportunities such as the exploding e-commerce market. For 200 years, the Postal Service has successfully adapted to technological change, whether the telephone, fax machine or telegraph, emerging stronger each time. If Congress allows it to, the USPS—which is the cornerstone of a $1.3 trillion national mailing industry that employs 7.5 million Americans in the private sector—can do so once again, while continuing to provide Americans with the world’s most affordable delivery service.