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Postal Service Sets Productivity Records, Still Faces Deficit Because of Congressional Requirement

Photo courtesy Wisconsin AFL-CIO

A new annual report from the U.S. Postal Service (USPS) showed increased worker productivity and a declining operational deficit, despite a larger amount of money lost by the organization based on a unique congressional requirement that USPS prefund retirement benefits for decades into the future. No other agency or private company in the country faces such a requirement. Congress passed the provision in 2006 and could repeal it at any time, solving most of the deficit problems the service faces.

In the fiscal year that just ended, the USPS reported operating revenues of $65.7 billion and operating expenses of $67.9 billion, a deficit of $2.2 billion—down from $4.9 billion last year. Only 16% of the overall losses were because of mail delivery. The remainder of the overall deficit of $15.9 billion comes from the prefunding requirement. Shipping revenues increased 8.7% and employee productivity set a record in 2012.

The Postal Service does not use taxpayer funds, all of its income is based on stamps and other products it sells to customers. The USPS has $47 billion put aside for future retiree health benefits, something no private company has currently achieved.

Fredric Rolando, president of the Letter Carriers (NALC), called on Congress to fix the problem: 

Today’s report makes clear that the financial crisis at the Postal Service is largely political in nature—and that the Postal Service is actually returning to health in operational terms as the economy improves.

The pre-funding mandate is a problem that Congress created, and which Congress should fix. It would be absurd to dismantle the universal network and degrade service to the public and to businesses—when almost all of the red ink has nothing to do with those services but stems directly from the external burden imposed by Congress.

Rather than rushing through a flawed bill in a lame-duck session, the new Congress should start over in January and develop constructive legislation that fixes pre-funding. That would eliminate the biggest drain on postal finances. It also would relieve the crisis atmosphere, letting the postal community focus on developing a forward-looking business plan that takes advantage of opportunities such as the exploding e-commerce market. For 200 years, the Postal Service has successfully adapted to technological change, whether the telephone, fax machine or telegraph, emerging stronger each time. If Congress allows it to, the USPS—which is the cornerstone of a $1.3 trillion national mailing industry that employs 7.5 million Americans in the private sector—can do so once again, while continuing to provide Americans with the world’s most affordable delivery service.

Sally Davidow, a spokesperson for the Postal Workers (APWU), echoed Rolando. "The cause of the financial crisis is largely misunderstood," she said. She said that the Postal Accountability and Enhancement Act of 2006 accounts for about 80% of this year's deficit. "That's at the heart of the crisis. Congress has to fix that."

Davidow said that the Postal Service is a treasured American institution and it would be a disgrace for it to be allowed to fail. 

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