USPS Will Be Broke by 2024 Without Reform: Postmaster General

Megan Brennan, Postmaster General of the U.S. Postal Service, told the House Oversight and Reform Committee that the USPS will run out of cash by 2024 if reforms are not enacted, according to the Washington Examiner.

Brennan also proposed saving billions by cutting back mail delivery to five days a week and increasing package delivery to seven days – which it already does in the case of Amazon – an idea that members of Congress see as a non-starter, according to the Wall Street Journal.

The quasi-government agency, mandated by law to deliver mail to every ZIP code in the country, continues to bleed billions in red ink annually due to declining mail volume coupled with a requirement to prefund retiree health benefits per a 2006 reform act.

“No set of management actions is sufficient to offset the decline in the use of mail” as paper correspondence is replaced by digital transmissions, Brennan was quoted as saying. “Without these defaults and aggressive management actions, we would not be able to pay our employees and suppliers or deliver the mail. We cannot overcome systemic imbalances caused by business-model constraints.”

“Things do not have to be this way,” said Rep. Elijah Cummings, D-MI, chairman of the committee. “Congress can enact legislation making some basic reforms, which is what we have been trying to do, including eliminating unreasonable payments imposed by Congress that will end the defaults and ensure the post office is not always operating on the brink of a liquidity event.”

Meanwhile Congress is weighing USPS reforms recommended last fall by a task force created by President Trump, with privatization being one of the options. That radical move, enacted in some European countries, would face a storm of opposition in a Democratically controlled House of Representatives.

Among other things, the task force recommended allowing the USPS to establish more market-based pricing for its mail and parcel delivery services, which have not been set “with profitability in mind.”

For the first quarter of 2019 ending Dec. 31, the USPS reported total revenue of $19.7 billion, up 2.9% from a year ago, and a net loss of $1.5 billion, up nearly $1 billion to 2018. First-class mail revenue was $81 million, down 1.2%, while shipping and packing revenue increased 8.7% to $516 million, as volume increased 5.4%.