GAO Report Finds Postal Service ‘Not Financially Sustainable,’ Recommends Congressional Action

Tobias Hoonhout
·4 min read

The U.S. Postal Service is “increasingly in peril” with over $78 billion in losses since 2007 and will require “congressional action” to remain afloat, according to a new multiyear audit conducted by the Government Accountability Office.

The audit, a copy of which was obtained by National Review, states that “USPS’s current business model is not financially sustainable,” and lays out three main issues: shrinking mail volumes, higher employee compensation and benefits, and increasing levels of unfunded liabilities.

“Absent congressional action on critical foundational elements of the USPS business model, USPS’s mission and financial solvency are increasingly in peril,” it states. “USPS’s growing difficulties to provide universal postal service in a financially self-sustaining matter provide Congress with the need to consider fundamental reform of the entire framework of postal services in the United States.”

The report began in October 2018 after requests from Senator Ron Johnson (R., Wisc.) and Representative Jim Jordan (R., Ohio), and lays out a number of areas to address, including redefining USPS’s required “universal” services, determining to what extent the organization should be financially self-sustainable, and whether its status independent establishment of the executive branch should be reassessed.

While the organization was restructured by the Postal and Enhancement Act (PAEA) in 2006, the GAO states that those reforms, which allowed the Postal Service to change postal rates, have been rendered ineffective by declining mail volumes, particularly that of first-class mail.

The Postal Service has been unable to control rising compensation and benefits, which represents approximately 75 percent of total costs, due to high levels of unionized bargaining power that “significantly” inhibit by the collective bargaining process, as well as statutory rules that govern employee pay and benefits. It also had approximately $119 billion in unpaid health and pension requirements in 2019, with the Postal Service delaying payments “to minimize the risk of running out of cash.”

The report also cited legal analysis from the National Bankruptcy Conference’s that concluded federal bankruptcy laws do not apply to USPS.

Jordan, ranking member of the House Oversight Committee, said in a statement that the report “reiterates what many of us have known for a long time.”

“The Postal Service’s business model is failing and simply throwing more of taxpayer’s hard-earned money at them won’t fix their problems,” Jordan said. “If Congress is going to be asked to get the Postal Service out of yet another fiscal jam, we owe it to the American people to make sure we aren’t just setting them up for yet another bailout the next time there’s an emergency. The USPS needs to be a self-sufficient, competitive enterprise, and a legislative overhaul for the long-term is the only way to make it one.”

Treasury Department and the Postal Service are currently locked in negotiation over a $10 billion line of credit that was included in the Senate’s phase-three coronavirus relief package that passed in March. On Wednesday, the Postal Service’s board of governors announced that Louis DeJoy, head of fundraising for the Republican National Convention in Charlotte, will serve as the new postmaster general.

The move comes after Trump has long criticized the Postal Service for not raising its shipping prices and for undercharging Amazon, including calling the organization “a joke” last month and saying he could block the emergency loan unless it raised its “price of a package by approximately four times.”

“For whatever reason, you can imagine, they don’t want to insult Amazon and these other groups,” Trump told reporters in the Oval Office. “If they don’t raise the price, I’m not signing anything.”

The New York Times reported Thursday that Amazon and other online retailers have launched a seven-figure advertising spree to push back on the president’s threats. Democrats have said they want to include $25 billion in additional Postal Service funding for the next round of coronavirus relief legislation.

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