What’s the financial situation of the US Postal Service?

Unfortunately the USPS has become an election year political football. The facts get lost in the rhetoric. Look at the highlighted words below. “Pay for health benefits in advance.” That’s not it at all. The requirement is to begin funding the liabilities for the promises made … just like must be done for pensions.

The agency owes up to $119 billion in retirement benefits. A 2006 law requires the agency to pay for retirees’ health benefits in advance. It is also required to pay into one of two federal government pension programs. Since 2012, USPS has missed $55.4 billion in those payments. The USPS hasn’t turned a profit since the passage of the 2006 law. In 2019, the agency spent $79.9 billion, $8.8 billion more than what it took in. Since 2006, the agency’s best financial year was in 2017, when it lost the equivalent of $2.7 billion in 2019 dollars.

Source: What’s the financial situation of the US Postal Service? – USAFacts

Look at what the General Accountability Office says as far back as 2010. Look at how Congress has ignored the recommendations for just as long.

Regarding USPS, reassessing its business model should start with the level of required postal services. For example, delivery is USPS’s most costly operation; USPS officials estimate annual savings of $1.4 billion to $1.8 billion if delivery of mail were reduced to 5 days rather than 6 days per week. Second, USPS is to function as a financially self-sustaining entity; however, it does not. A reassessment could include determining whether some of USPS’s costs and liabilities should be borne by taxpayers. Third, alternative institutional structures for USPS range from a federal agency to a private company. A bankruptcy proceeding is not an effective or appropriate means to address the issues associated with a potential USPS restructuring, according to the National Bankruptcy Conference.

Prior GAO reports have included suggestions for Congress to address USPS’s financial viability. For example, GAO’s 2010 report identified strategies to reduce compensation, benefits, and operational costs. GAO stated that Congress, among other things, consider all options available to reduce costs. While bills in this area were introduced and in some cases passed congressional committees, legislation was not enacted. In 2018, GAO reported that the financial outlook for the Postal Service Retiree Health Benefits Fund was poor—the Office of Personnel Management forecasted the fund would be depleted by 2030 if USPS continued not making payments into it. Legislation has not been enacted to place postal retiree health benefits on a more sustainable financial footing. Postal reform legislation has not taken place in part because of the difficulty in obtaining compromise among various stakeholders with divergent views (see figure below). However, since GAO’s 2010 report, USPS’s financial condition has significantly worsened raising fundamental questions about key elements of USPS’s business model. Such questions warrant congressional action.

Source: 2020 GAO Report

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