By Ross Marchand
America’s mail carrier was once a shining example of governmental innovation, being at the cutting edge of technological achievements, such as using planes and trucks to haul mail cross-country. But the United States Postal Service has fallen far and fast during the past couple of decades, accumulating more than $70 billion in debt since 2007.
On Nov. 14, taxpayers and consumers received even more bad news from the USPS as postal leadership announced an $8.8 billion net loss for fiscal year 2019. Some officials and policymakers have called for a taxpayer bailout to avert these profound fiscal failings, but pouring even more dollars into a financial inferno is unlikely to bring the agency back into the black. New leadership must commit to an array of cost-cutting reforms and end the secrecy permeating the USPS. For the sake of all Americans, it’s time to return the USPS to its low-debt, high-innovation roots.
To a new observer of postal problems, an $8.8 billion annual net loss sounds alarming. In reality, this rampant red ink is nothing new. The agency hasn’t had a decent year financially since 2006.
During the past decade, taxpayers and consumers have been treated to perpetual news of mail malaise. Yet, at the Nov. 14 USPS Board of Governors meeting, where the latest fiscal results were announced, agency leadership sounded optimistic and tried its best to put an upbeat spin on an abysmal situation. Out-going Postmaster General Megan Brennan claimed, “We continue to adjust to declining mail volume and remain focused on leveraging our unique and unrivaled network to gain new customers and grow profitable revenue in the increasingly competitive package business.”
USPS can attempt to pivot all it wants, but unless it gets a grip on growing “controllable losses” (i.e. losses within management’s control), the agency will run out of cash by 2024.
In a January 2019 report, the Taxpayers Protection Alliance outlined several steps the USPS can take to put itself on a firmer fiscal footing. Consumers tend to focus on the agency’s declining on-time performance and growing package handling issues, but many of the USPS’s transportation issues lie in the middle-mile. To get mail across the country and to local post offices, the agency contracts out transportation services to middle-mile truckers, but these private operators regularly overbill the agency for their services. According to the inspector general, there’s no standardized, centralized process for reporting irregularities in middle-mile service performance. Meanwhile, post offices aren’t doing their due diligence in reporting irregularities and regularly fail to share reimbursement paperwork with other offices. According to TPA’s report, the USPS could save more than $1 billion per year through more consistent reporting, auditing and information-sharing.
The agency also could take significant steps to restore trust with the public and save on costs. In recent years, the USPS has gained a reputation for hiring employees without thorough background checks. According to a 2019 IG analysis of 200 employees hired with a criminal record, 42 (or 21 percent) “had no evidence of the required hiring approval certification.” As a result, the public regularly sees reports of postal employees stealing packages, creating fraudulent money orders and trafficking illicit drugs. In addition to tarnishing the image of the agency, failure to screen prospective employees results in rehiring, retraining and legal costs that would be avoidable if the USPS maintained a tighter ship.
Fortunately, USPS leadership can pave the way for a stable, prosperous agency that needn’t rely on taxpayer dollars or higher stamp prices. By auditing its middle-mile contractors and maintaining scrupulous hiring processes, the agency can take a giant step toward solvency and improve its image. Consumers and taxpayers deserve across-the-board reforms, not half-measures and $8.8 billion yearly net losses.