By Holly Wilson
The United States Postal Service (USPS) this week released their first quarter report – and although they showed a net gain for the quarter, the outlook remains negative. After nine straight years of multi-billion dollar losses, this long-plagued quasi-governmental agency is on track to maintain their losing streak due to poor decision-making by its leadership.
In fact, the net income of $307 million in the first quarter is largely the result of interest rate changes that impact workers’ compensation expenses, which by USPS’s own admission was “a factor outside of management’s control.”
Worse, the temporary fee increase set in place by the Postal Regulatory Commission back in January of 2014 to compensate for a recession-related decline in demand of services is set to expire in April. As a result, USPS CFO and Executive Vice President, Joseph Corbett, expressed concern about the agency’s looming fiscal struggles:
“While net income is favorable compared to a net loss, it unfortunately does not reflect the end of our losses… Absent legislative reform, the exigent surcharge is expected to roll back in April, and our losses will increase by approximately $2 billion per year.”
Unfortunately, gridlock in Congress is blocking reforms and limiting the USPS’s effective governance. The agency has been operating under the control of a Temporary Emergency Committee (TEC) for more than year, rather than under the guidance of a full Board of Governors, with serious implications for accountability identified in a new study from the R Street Institute.
As we noted last year, mounting losses are occurring while the USPS is apparently violating federal law to leverage its legal monopoly on first-class mail to expand into markets well-served by private businesses.
The time for reform is long past. Congress must act to ensure that meaningful oversight and financial reforms are implemented at the USPS to protect taxpayers from a future bailout.
Bad News Overwhelms Good from Postal Service for 2016
