The Postal Service’s Sorry Situation, in Brief

New chairman of the House Oversight and Government Reform Committee Jason Chaffetz (R-UT) was not happy as he faced down the biggest perpetrators of governmental abuse in a hearing yesterday. “You can try to put lipstick on this pig, but the reality is, it is ugly. To get on this list, you have to be engaged in waste, fraud, and abuse in excess of a billion dollars a year,” he said to Gene Dodaro, comptroller general of the Government Accountability Office, which compiles the “High-Risk” list, and representatives from the top five agencies on it.

The U.S. Postal Service was not one of those ugly, chosen few, but it was one of 30 governmental entities on the list nonetheless because, said the GAO report released this week, it “continues to be in a serious financial crisis, with insufficient revenues to cover its expenses and financial obligations.” Here are the risk factors named by GAO, a succinct portrait of the Postal Service’s sorry situation:

  • A 27% decline in mail volume to 155 billion pieces from a peak of 213 billion in 2006;
  • An even steeper, 35%, nose-dive for USPS’s most profitable product, First-Class Mail;
  • Unfunded liabilities of about $102 billion—$87 billion of it for payments in pension and retiree health benefits and workers’ compensation liabilities, the rest in outstanding debt to the U.S. Treasury;
  • Statutory limitations on taking action to reduce its financial pressures, such as moving to five-day delivery;
  • Rising shipping business that’s less profitable than declining First Class Mail;
  • About $1.4 billion in exigent rate revenue that soon could be removed.

On the plus side, according to GAO, the Postal Service is one of 18 agencies on the list that has partially met all five of the criteria for removal: demonstrating leadership commitment, updating its five-year business plan, reporting on cost-reduction moves, and assessing its capacity to address its problems.

The GAO also qualified that, unlike many of the agencies leading the list (Defense, NASA, and Energy, to name a few) USPS could vault into a much more stable position with a new reform bill passed by Congress. The proper legislation could modify the Postal Services’ retiree benefit payments, help it better align costs with revenues, and require any labor contracts to take USPS’s financial condition into account.

Will the new chairman of Oversight and Government Reform stump louder for postal reform than did his predecessor, Darrell Issa (R-CA)? In yesterday’s hearing, he appeared impatient to see some change in the High-Risk agency situation. While he made no specific mention of the Postal Service, he made plain that he would be holding agency representatives’ feet to the fire in turning around their situations.

“You say you’re making measurable progress. I’m sorry, you’re not making any progress. You’re back here again!” Chaffetz chided agency bigs that included Deputy Under Secretary of Defense Alan Estevez and Deputy Adminstrator of Medicare and Medicaid Shantanu Agrawal. “Some of the thing’s we’re going to want to know is who’s accountable. We’re talking hundreds of billions of dollars.”

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