News & information

Statement on Postal Service's 2019 Q3 Financial Report

The Postal Service’s third quarter financial report shows the need for policymakers to address two public policy issues beyond USPS control—the stamp price rollback and the congressional mandate that USPS pre-fund future retiree health benefits decades into the future.

First, Congress should address the pre-funding burden it imposed in 2006, which requires USPS—alone among all public and private entities in the country—to pre-fund future retiree healthcare benefits at an annual cost of about $5 billion. It’s important to note that this goes on the books as red ink whether or not it’s actually paid in a given year.

Second, in April 2016, the price of a stamp was rolled back by two cents, reducing postal revenue by $2 billion a year. That was the first rollback since 1919 and it makes little financial sense because USPS already has the industrial world’s lowest rates.

Without the prefunding burden and the price roll-back, the Postal Service would likely have reported an operating profit through the first nine months of the fiscal year.

 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.

Fixing the external financial burdens posed by the price rollback and pre-funding, which we hope the PRC and Congress will do soon, will put postal finances on a stable footing and allow USPS--which is based in the Constitution; funds itself through earned revenue, not taxpayer money; and enjoys broad public and political support--to continue providing Americans and their businesses with the industrial world’s most-affordable delivery network.