Postal Service asking for another taxpayer bailout

For an agency that claims it “generally receives no tax dollars for operating expenses,” the U.S. Postal Service (USPS) sure does like government subsidies. Despite receiving $120 billion in taxpayer-funded bailouts since 2020, the USPS is once again asking for more money. As Washington Post reporter Jacob Bogage notes in a recent article, Postmaster General Louis DeJoy and mailing industry officials have “asked the White House to send the Postal Service $14 billion, which would come from what the agency says is decades of overpayments into the Civil Service Retirement System.” 

These appeals for more money ignore the real root of the USPS’ problems. The agency’s fiscal issues stem from a failed business model and lack of cost control. No amount of taxpayer dollars will fix the fiscal fiasco plaguing the USPS.

America’s mail carrier is requesting that “Congress and other stakeholders...help support USPS in the implementation of key self-help initiatives outlined in the [Delivering for America] Plan that are critically necessary, and that will ultimately enable our operational and financial success.” The USPS fails to explain why $120 billion in taxpayer dollars and double-digit percentage increases in stamp costs haven’t facilitated this “self-help.”

The USPS continues to struggle with staying under or within budget for basic operations. In November 2023, the agency’s Inspector General (IG) reported that the USPS was significantly overpaying for air transportation. The report found, “The Postal Service did not accurately plan air weight capacity on the [IG reviewed] specific lanes for the aviation supplier...Specifically, six of nine operating periods (about 67 percent) within our scope had actual mail weight that was less than the minimum [REDACTED] percent of planned air weight capacity for mail sent to the aviation supplier.” 

For the one aviation partnership under review, this lapse resulted in more than $25 million in losses for the USPS. These figures only provide a small glimpse into total air mail losses. The USPS spends about $3.5 billion annually for air transportation services, and the IG report only focused on $400 million-worth of deliveries. Extrapolating IG-reported figures to all air mail (rather than just one supplier), capacity miscalculations likely cost the agency hundreds of millions of dollars per year. The USPS is poised to cut down on these cost overruns thanks to renewed competitive contracting and its expanded partnership with private providers such as the United Parcel Service (UPS). But, continued accounting lapses will not bode well for the agency.

Air transportation expenses are far from the only fiscal issue facing the USPS. Agency watchers have long been criticalof “workshare discounts,” or about $15 billion worth of discounts on postage the USPS extends to private businesses that perform mailing-related work (e.g., pre-sorting and bar-coding mail) on behalf of the USPS. The basic idea of farming out postal operations and allowing private players to pocket the savings is a solid one, but only if the postage discounts correspond to actual savings. Even though nearly 90% of market dominant mail (i.e., letters and marketing mail) is workshared, the IG has found documented savings to be sorely lacking.

According to a February 2024 IG report, the USPS “does not have detailed procedures that document responsibilities for calculating avoided costs and workshare discounts for First-Class Mail and Marketing Mail letters and enable management to effectively monitor those control activities.” 

In addition, the USPS fails to regularly monitor data inputs that go into its workshare discount pricing models. The USPS is asking taxpayers and consumers to take a leap of faith and trust that it is properly extending $15 billion in discounts based on mailing companies saving the USPS money.

Repeated taxpayer-funded bailouts will not fix this lack of accountability and fiscal discipline at the USPS. Instead of bilking taxpayers and consumers, America’s mail carrier needs to do some soul-searching and closely examine its many expenses.

David Williams is president of the Taxpayers Protection Alliance.