As Congress and the new Administration work on the new federal budget, there will be a heavy focus on creating the right conditions for generating economic growth and protecting taxpayers.
Achieving these goals will stand to produce positive ripple effects across critical domestic markets and affect overall consumer well-being. Two of the primary avenues Congress will be considering are tax reform and defraying the costs of excessive government commitments.
One prominent commitment that can’t be ignored is the Postal Service’s retiree health benefits prefunding requirement. This idea conceived by the Postal Service has been consistently subject to misrepresentation, which have ultimately led to the wrong conclusions about how USPS should be reformed in order for it to recover from its bleak financial position.
Particularly, Frederic Rolando of the National Association of Letter Carriers continues to wrongfully cite the system as burden forced into place by Congress that is now keeping the Postal Service from achieving financial stability.
In reality, USPS supported the system from the beginning, believing that it would be successful. The Postal Service CFO, H. Glen Walker, called it “a farsighted and responsible action” and one that “augurs well for our long-term financial stability…”
Now, through USPS mismanagement and failure to make payments, the prefunding requirement has created a financial situation that is far worse than what Rolando says. With over $121 billion in unfunded liabilities even a Republican-led Congress has forced the idea of a massive government bailout in the form of a plan to virtually eliminating nearly $50 billion in liabilities.
The contributions from the federal government don’t end there. To say that the Postal Service does not receive taxpayer dollars neglects to account for its massive financing and monopoly advantages, which amounts to approximately $18 billion in subsidies annually.
Lastly, the Postal Service is losing massive amounts of money on its sprawling lines of service. Operating profits should be much higher than $1 billion when you consider that traditional letter mail services (various First-Class and Standard Mail products) covered costs by more than $21 billion in 2016 alone.
To realistically achieve financial stability, the Postal Service needs to be more transparent about its costs within other lines of service and ill-advised ventures, and make the appropriate to decisions to cease them, as a means to prevent further losses.
A bailout from Congress would miss the chance to help the USPS to become a leaner, more efficient and accountable operation, and would also sadly add greater risks for taxpayers.