Although the USPS gained $1.3 billion in “controlled income” in the first quarter of 2016, the agency’s beleaguered financial position undoubtedly remains in light of amassing losses of $31.5 billion in the previous four years. To temper any optimistic views of the announcement, USPS’s own Chief Financial Officer, Joseph Corbett, remarked that the report indicated nothing remarkable by stating that “it unfortunately does not reflect the end of our losses.”
The controlled income figure fails to account for the $1.45 billion retiree-health benefits payment that will not be paid by the Postal Service, adding to the unfunded liability that is now in excess of $54 billion. USPS is also legally prohibited from borrowing additional funds after maxing out its $15 billion credit limit with the U.S. Treasury. To further analyze the USPS’ finances, American Consumer Institute recently submitted comments to the Postal Regulatory Commission (PRC) questioning the profitability of USPS’ products and services, and its abuse of its monopoly position to promote unregulated activities at the cost of its regulated postal services.
The modest gains for the first quarter were in large part due to the exigent rate increase for market dominant products. This rate hike, which is reserved for addressing “extraordinary or exceptional circumstances,” has been in effect since January 2014 to mitigate the effects of the great recession. After several rate increases of this kind and 7 years of recovery, it is obvious that the exigency has outlived its intended purpose and has simply become a financial crutch for the continually mismanaged enterprise.
Furthermore, last June, the U.S. Court of Appeals for the District of Columbia Circuit delivered a ruling that condemned the possibility of the emergency rates becoming permanent. The court cited that the aftereffects of the recession have become “the new normal,” and that Postal Service must adjust to that reality.
In truth, the latest financial report from USPS must serve as yet another reminder that the agency must focus on its profitable core products, and not waste its resources on developing new unregulated products that are intended for markets that are already highly competitive.
The Postal Service will soon have an opportunity to refocus on its mission as it undergoes changes in leadership in the coming months. The management transition is highlighted by five members of the Board of Governors who are waiting to be confirmed in Senate, and includes the new soon-to-be-named USPS Inspector General, as well as the Postal Service’s new VP of costing and pricing, Sharon Owens.
We can only hope that they will bring an injection of fresh ideas and leadership, and help steer the Postal Service away from accelerating its demise and amassing overwhelming debt.