Postal Service Continues to Lose Money, Thanks to Congress

Image: Postal Service Continues to Lose Money, Thanks to Congress

Tuesday, 28 May 2013 11:56 AM

By Courtney Coren

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If the U.S. Postal Service was a private corporation, it would be out of business by now, but Congress seems intent, at least for the moment, on keeping it alive -- even though it's losing $25 million a day.

According to The Los Angeles Times
, the service lost nearly $16 billion last year and $1.9 billion between January and March of this year. Postal Service officials say if the bleeding continues, daily-delivery service could come to an end, and that includes Saturday delivery, which Congress just voted to continue.

"We are in real trouble, and we need comprehensive postal reform yesterday," Mickey Barnett, chairman of the Postal Service Board of Governors, told a congressional committee in April.

According to the Government Accountability Office, Americans are using the Internet more and more to send letters, pay bills, and read magazines, which has caused mail volume to drop by a quarter since 2006.

Even though Postmaster General Patrick Donahue has reduced staff, consolidated mail facilities, and lowered express-delivery standards, it has not been enough to offset the drop in revenue.

Contributing to the problem is Congress' reluctance to lift any of its mandates on the Postal Service, which is essentially a government-run corporation. For that reason, overhauling the system or making even modest changes is difficult, according to Mike Schuyler, a fellow at the Washington-based Tax Foundation who studies postal issues.

"The Postal Service has far too little flexibility when it needs to adjust, and it's really in handcuffs because of all the requirements Congress puts on it," Schuyler told the Times.

The controversy over Saturday delivery is a perfect example. Postal officials tried to eliminate it to save $2 billion, but Congress, under pressure from constituents, stopped the move in its tracks. A bill also failed in Congress that would have saved $4.5 billion by replacing doorstep deliveries with curbside deliveries. Another effort to close rural post offices never got off the ground because of expected opposition from Congress.

According to the Times, the real financial problem facing the Post Office may have been created by Congress in the first place through the 2006 Postal Accountability and Enhancement Act. The law required the service to begin prefunding the healthcare benefits of future retirees 50 years in advance. The requirement costs about $5.6 billion a year, and it caused the Postal Service to lose $5.1 billion the first year after it was enacted.

Some in Congress are trying to reverse the 2006 law. Independent Sen. Bernie Sanders of Vermont and Democratic Rep. Peter A. Defazio of Oregon have crafted legislation to end the prefunding of health benefits and to lift the limits on rate increases. Their bill, which has the support of union members, would also allow postal officials to make other changes.

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