Imagine if the Washington, D.C. region’s third biggest business went bankrupt, causing a ripple impact on every home and business in Northern Virginia.
That scenario is increasingly possible because of the dismal and deteriorating finances of the U.S. Postal Service, headquartered in the District, which describes itself as “a self-supporting independent federal agency.”
Were it classified as a business with its $70 billion of annual revenues, the Postal Service would rank 40th on the Fortune 500 and be the third largest public company in the region.
By any reasonable measure, the Postal Service’s finances are alarming.
Its net worth is negative $62 billion.
For 12 consecutive years the Postal Service has lost money, accruing cumulative net losses of $69 billion.
Despite the very strong economy, in Fiscal Year 2019 the Postal Service is budgeted to lose $6.6 billion, its second biggest loss in 20 years.
The U.S. Government Accountability Office has repeatedly warned of the Postal Service’s dangerous financial conditions in its biannual High Risk List report to Congress.
A bankrupt or liquidity constrained Postal Service means that mail and package delivery could grind to a halt. This impacts everyone, even millennials who think they can shun mail.
Today, 40 percent of bills are still paid by mail, including many by wealthy, older consumers and business people. Large delayed payments disrupt businesses and create many negative ripple effects on those with whom they transact commerce.
To address declines in mail volume arising from the Internet, the Postal Service has been aggressively trying to expand its package business. Yet, this is its least profitable area, behind first-class and marketing mail. To be profitable in packages, the USPS will have to charge many shippers a lot more or pass on certain business.
The Postal Service should take a lesson from General Electric: get out of businesses that are not part of its core mission or profitable, even if that means much lower revenues.
Congress also has a critically important role to play, including reviewing and addressing a December 4 Presidential task force report on the Postal Service. For starters, Congress needs to define the bare minimum services, or the “universal service obligation” that the Postal Service should provide to perform its mission to help bind the nation together.
Congress should also give the Postal Service greater flexibility to consolidate under-utilized facilities and to reduce, at least in certain geographic areas, mail delivery to less than six days a week.
Close to home, Congressman Gerry Connolly, whose district comprises Fairfax County, is Chairman of the House Subcommittee that would principally oversee postal reform. He should soon hold hearings on the Task Force report and the Postal Service’s general condition. The goal should be to enact Postal Reform by the end of 2020, after which it may be too late if we are to avoid large bailouts and delivery chaos.
Paul F. Steidler