Today’s financial report for Fiscal Year 2018’s first quarter shows the Postal Service’s underlying business strength while also indicating the need to address external matters beyond USPS control.
The operating profit of $353 million reflects USPS’ vitality and its importance to the public and our economy. The operating profit, of course, represents earned revenue; by law, USPS gets no taxpayer money for its operations.
At the same time, the quarter’s operating profit would have been higher, and there would not have been a net loss of $540 million, without two public policy issues that need to be addressed.
One is the exigent price rollback. In April 2016, the price of a stamp was rolled back by two cents, reducing postal revenue by about $2 billion a year. That was the first rollback of stamp prices since 1919 and it makes little financial sense because the Postal Service already has the industrial world’s lowest rates.
Fortunately, the Postal Regulatory Commission is in the midst of a legally mandated review of the postage rate-setting system. At present, USPS is constricted in its ability to adjust rates by no more than the Consumer Price Index, but the CPI is an economy-wide measurement of consumer goods and services that doesn’t fit a transportation and delivery provider. The PRC has the ability to correct this mismatch and relieve the resulting financial pressure.
Meanwhile, Congress should address the pre-funding burden it imposed in 2006, which requires USPS — alone among all public and private entities — to prefund future retiree healthcare benefits decades into the future. This produces an onerous annual burden of billions of dollars.
Fixing the external financial burdens posed by the price rollback and pre-funding will allow USPS – which is based in the Constitution and which enjoys broad public and political support – to continue providing Americans and their businesses with the industrial world’s most-affordable delivery network.
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