The Postal Service Just Lost $3.3 Billion: Blame Congress
Yet again, Washington's inability to compromise has real-world consequences worth billions of dollars
The slow disintegration of the U.S. Postal Service might be the single most embarrassing sign of how dysfunctional our federal government has become.
If not, it's got to at least be in the top five.
Today, the USPS announced a $3.3 billion quarterly loss. This wasn't a total surprise. Even though the holiday shopping season usually buoys its revenue, USPS has been losing money for five years. By now, we all know the post office is officially on fire. And, as you probably guessed, the House and Senate can't reach an agreement on how to save it.
As I've previously written, USPS, which receives no taxpayer funding, is suffering a death by a thousand paper cuts. The internet is killing first class mail, the service's traditional cash cow. It has enormous legacy labor costs. It's required to deliver mail to every far-flung corner of the country, no matter how insanely unprofitable it is. It also has to deliver mail on Saturdays, no matter how insanely unprofitable it is. Meanwhile, a law from 2006 is forcing it to pre-pay about $5.5 billion dollars every year to cover health benefits for future retirees. Of its losses in the past three months, $3.1 billion were due to the pre-payment requirement. Note: That's not all of its losses. Just most of them.
These are not simple problems to fix. Turning USPS into a profitable, self-sustaining entity will be a years-long task that will take some serious business vision. I don't claim to know the solution. Not even close. But there are obvious places to start. For one, you could let it stop pre-paying for its retiree obligations, so it doesn't collapse under their weight now. You could also allow it to close a few post-offices and let go of a few workers in the process (Harsh? Yes. Necessary? Even more so.).
Right now, there are two main pieces of legislation sitting in Congress that would help achieve these things, but neither accomplishes all of them. A bipartisan Senate bill would return billions of dollars USPS has overpaid to cover its pension obligations, and use it to fund buyout packages to encourage retirements. It would also let the service pre-pay its retiree health benefits over 40 years instead of the 10 years required under current law. That way, it wouldn't be staring down an annual $5.5 billion bill. But the legislation isn't very aggressive about slimming down services. A Republican-backed House bill sponsored by Rep. Darrell Issa would create a committee to slash billions in spending on post offices and processing facilities while making it easier to lay off workers. But it doesn't do much to ease the impact of those healthcare payments.*
Predictably, there's no sign of compromise. Instead, Issa and the Senate bill's backers issued dueling statements pushing their versions of the legislation. In it's report today, The Hill notes that USPS could run up against its debt ceiling in the fall, which might force action from Congress.
Then again, we all remember the last time there was a debt ceiling debate. That was pretty embarrassing too.
*An earlier version of this article mischaracterized some of the differences between the two bills regarding the treatment of pension payments.