WASHINGTON--()--Today, in response to the United States Postal Service’s (USPS) announcement that it will soon move to cancel six-day delivery of first-class mail, Citizens Against Government Waste (CAGW) expressed its support for USPS’s drive to control its operations in order to cut costs and reduce the risk of a taxpayer bailout. CAGW has long called for Congress to allow the USPS to operate more like a private-sector business. Accordingly, Congress should resist pressure to block the USPS from reacting as any business would to the problem of falling demand for its services: by cutting costs.
“as a way to help the post office deal with billions of dollars in debt.”
The financial travails of the USPS are well-documented. After recording losses of $8.5 billion in fiscal year (FY) 2010, $5.1 billion in FY 2011, and $15.6 billion in FY 2012, the USPS teeters on the brink of financial ruin. As with the rest of the nation’s fiscal problems, Congress is ignoring the problem. Fortunately, the American people seem to understand that the USPS should be allowed to adjust its business model as a way to save costs. According to a 2012 New York Times/CBS poll, 7 in 10 Americans support the USPS’s decision to cancel Saturday delivery “as a way to help the post office deal with billions of dollars in debt.”
CAGW President Tom Schatz said, “While CAGW fully supports the Postal Service’s right to move to a five-day delivery schedule, it is clear that doing so will not eliminate the threat of an entirely insolvent USPS or a future taxpayer bailout. The congressional reaction to USPS’s intent to eliminate Saturday delivery will serve as an indication of its willingness to begin to address structural reform of the USPS in the 113th Congress. In the coming weeks, it will become clear whether lawmakers care more about the taxpayers, who ultimately could be on the hook for tens of billions of dollars, or the demands of postal unions and their allies that have blocked meaningful reform for years. If the USPS is to have any hope of enacting the cost reduction strategies that it will unveil in March, it must first be allowed the freedom to make a change as simple as five-day delivery.”
Contrary to the reports of news outlets, the main reasons for the USPS’s financial straits are a lack of demand for mail delivery, massive labor costs, and an outdated business model. First-class mail, which makes up more than half of USPS revenue, peaked in 2006 and has been falling ever since. USPS’s obligation to pay $5.5 billion each year into its future retired employee benefit fund pales in comparison to its projected losses of $21 billion per year by 2016.
“The Postal Service is sinking,” added Schatz. “Congress must get out of the way and allow Postal management to restructure now in order to prevent a taxpayer bailout later.”
Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. To learn more, visit www.cagw.org.