Business

A Post Office Bail Out Is Near

The U.S. Postal Service could be headed for a bailout if budget woes are not addressed with significant reforms, argued an expert Friday.

Congress has looked to address the budget problems with the post office facing $15 billion in debt. The United States Postal Service (USPS) has supported efforts to advance legislative and regulatory reforms to fix the budget shortfalls. But critics contest that the real issue is mismanagement.

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The Taxpayers Protection Alliance (TPA) warns that a taxpayer-funded bailout is becoming increasingly more likely as the postal service debt racks up. The conservative taxpayer advocate notes particular concern over legislation that was recently introduced March 22.

“There’s some legislation that isn’t being considered yet, but was recently introduced that build upon legislation that was introduced last year,” TPA Director Ross Marchand told InsideSources. “It would make the bailout of the postal service all but certain because what’s being proposed is the ability of the post office to be forgiven of their Treasury loans.”

Democratic Sen. Thomas Carper introduced the legislation which is intended to improve postal service operations, services, and transparency.  The senators sponsoring the legislation also supported a similar reform bill that failed to advance in 2015. Marchand argues the bill includes language that will allow $15 billion worth of loans from the U.S. Treasury to be forgiven.

“I think, unfortunately, there’s a high chance of a bailout if reforms are not made,” Marchand said. “There are so many problems and I think part of that is due to poor and inept leadership from the postal service.”

The U.S. Postal Service counters that the issue is declining mail volume and costs it cannot control. The post office can only enact so many changes before interfering with congressionally-mandated restraints. Lawmakers are considering reforms to give the post office more flexibility like when it comes to pricing.

“The Postal Service’s financial situation, which is the result of declining mail volume and costs largely outside of the Postal Service’s control, is serious but solvable,” a USPS spokesman said in a statement provided to InsideSources. “Continued innovation and aggressive management actions — together with the passage of key provisions in postal reform legislation currently in Congress, and a favorable outcome in the Postal Regulatory Commission’s 10-year review of the Postal Service’s pricing system — will restore the organization to financial stability and permit us to continue to provide excellent service to the American public.”

Postmaster General Megan Brennan recently urged lawmakers to enact postal reform legislation this year. She pointed to the legislation introduced by Sen. Carper as reforms that would put the postal service on a sustainable financial path. She added such reforms will allow the post office to continue to meet mailing and shipping demands.

Marchand believes that public pressure will be what eventually brings about substantial changes. But he fears that call to action will result in counterproductive reforms. The TPA sees its mission as educating the public, like when it comes to how expensive a bailout would be, so that lawmakers consider going a different route.

“I like to remain cautiously optimistic,” Marchand said. “It’s honestly difficult to tell and I don’t want to make any firm predictions. But here’s the downside, the reason to doubt these reforms will take place. It’s always easier to bailout, there’s always a tendency to bailout.”

Marchand has some ideas of his own on how best to solve the postal service budget problems. He argues that Saturday deliveries should be scrapped, management needs to improve, and there needs to be more transparency – especially when it comes to private deals made with companies like Amazon. He’s also hesitant towards having more price flexibility as that could raise costs on customers without addressing the deeper problems.

The U.S. Government Accountability Office found in a report that the postal service is facing $121 billion in total debt and unfunded liabilities as of 2016. Retiree health and pension benefits accounted for most of that expense. The outstanding debt alone is at the current statutory limit of $15 billion.

The USPS releases annual and quarterly reports to highlight its budget and expenses. The last annual report marked the 11th year in a row that the post office had a multi-billion dollar loss. It reported a net loss of $2.7 billion last year and a net loss of $5.1 billion for fiscal year 2015. It also reported a $5.5 billion loss in the year before that.

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