Government Report Shows that the U.S. Postal Service Desperately Needs Long-Term Fixes from Congress

Today the Government Accountability Office (GAO) released a report illustrating that the United States Postal Service’s financial problems were a problem well before the current COVID-19 and that it is “essential” for Congress to step in and reform the agency’s failing business model.

Since 1970, Congress designed USPS to be a self-sustaining, business-like entity that would pay for its operating costs primarily with revenue from postage and postal-related products and services; however, its financial viability has been in question for over a decade. Since the GAO put the Postal Service on its High Risk list in 2009, the report says that the agency’s “financial viability has progressively worsened due to declining mail volume, increased employee compensation and benefit costs, and increased unfunded liabilities and debt.”

And while the Postal Service has taken steps to correct its financial woes, current requirements in federal law “limit USPS’s ability to make changes” that could turn things around.

Contrary to currently hyped demands for a no-strings-attached bailout, Ranking Member Jim Jordan, explained that the GAO’s latest findings illustrate the need to include substantial reforms along with any future relief package.

“This report reiterates what many of us have known for a long time: The Postal Service’s business model is failing and simply throwing more of taxpayers’ hard-earned money at them won’t fix their problems,” Mr. Jordan said. “If Congress is going to be asked to get the Postal Service out of yet another fiscal jam, we owe it to the American people to make sure we aren’t just setting them up for yet another bailout the next time there’s an emergency. The USPS needs to be a self-sufficient, competitive enterprise, and a legislative overhaul for the long-term is the only way to make it one.”

“The U.S. Postal Service’s twelve consecutive years of revenue losses are a clear indication that there is a dire and long overdue need for fundamental reforms,” said Government Operations Subcommittee Ranking Member Jody Hice. “The coronavirus pandemic has exacerbated these pre-existing problems, but the Postal Service’s mission is far too important for Congress to allow it to fall victim to its own structural flaws and failures by senior leadership. Simply writing a bailout check for billions of dollars is not a serious solution. Now is the time to address these challenges head-on. We have an opportunity to right the ship and set it on a course for long-term sustainability.”

“From years of mismanagement, ballooning costs, and a lack of accountability, the United States Postal Service is truly an agency in dire need of reform. While Democrats continue to push for a complete bailout of the Postal Service in COVID-19-related legislation, the report released today makes clear that the systemic issues within the Postal Service far pre-date this pandemic,” said Oversight Committee member Fred Keller. “An unrestricted bailout of the Postal Service would be an irresponsible use of taxpayer funds. Any assistance must be accompanied by significant structural reform that ensures the Postal Service can function within its self-sustaining means, as intended. I look forward to working with the Postal Service on such reforms that will allow it to continue to provide its essential services into the distant future.”

Highlights from the report:

• The COVID-19 pandemic did not create the Postal Service’s financial problems, it merely exacerbated the effects of a longstanding mismanagement and a failing business model.
• GAO put USPS on its high-risk list in 2009 and reports that its finances have since progressively worsened.
• GAO reports that USPS’s net losses totaled approximately $78 billion from FY 2007-2019 and its productivity has plummeted in recent years.
• At the end of FY 2019, USPS’s unfunded liabilities and debt totaled $161 billion—an amount more than double its annual revenues.
• GAO recommends that Congress consider reassessing the level of postal services the nation requires, changing the law to make USPS financial self-sustaining, and determining the most appropriate structure for USPS.

Quotes from the report:

 “USPS is the largest postal service in the world, delivering an estimated 47 percent of all mail sent globally. USPS’s financial viability, however, has been on GAO’s High Risk List since 2009 due to USPS’s poor financial condition, which has worsened in recent years due to declining mail volumes and rising costs.” 

“USPS is [supposed] 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.”

“USPS’s net losses totaled approximately $78 billion from fiscal years 2007 through 2019 and its productivity has declined in recent years—a trend that has contributed to its cost pressures.”

“USPS’s current business model is not financially sustainable due to declining mail volumes, increased compensation and benefits costs, and increased unfunded liabilities and debt.” 

“Absent congressional action on critical foundational elements of the USPS business model, USPS’s mission and financial solvency are increasingly in peril. USPS’s growing difficulties to provide universal postal service in a financially self-sustaining manner provide Congress with the need to consider fundamental reform of the entire framework of postal services in the United States.”

“[W]hile major postal reform legislation was enacted in 2006, further postal reform legislation has not been enacted.”

Full text of the report is available here.

Background:

• House Democrats have repeatedly pushed to bail out the postal service without implementing long-needed reforms.
• In January 2019, the committee asked the USPS for a financially stable business plan. USPS promised a plan that by that summer, but never produced it.
• Last month, Committee member Fred Keller (R-PA) asked about a financial stability plan during a briefing with Postmaster General Megan Brennan, but one has still yet to be produced. The Oversight Committee has a responsibility to review and require reforms before engaging in earnest policy reform discussions.