Cato Institute: Restructuring the U.S. Postal Service

The far-right wing Cato Institute has released another report on the US Postal Service, which, not surprisingly, calls for the privatization of the agency. While the report may be useful in some ways, you may want to double check the Institute’s “facts”. It informs us, for example, that “The USPS is currently at a tipping point due to the combined effects of a large recent decline in volume and revenue that is projected to extend into the future, as well as increases in operating costs”. USPS operating expenses have in fact decreased every year since 2007.

Cato Institute: Restructuring the U.S. Postal Service

Cato Institute: Restructuring the U.S. Postal Service.

  • Idiotland

    Once again, how do you know a conservative is lying? Their mouths are moving.

  • KY Unionman

    The FedEx and stamps.com ads said it all

  • Edd

    lift the private express mail statues and lrt everyone compete, this is the best thing for the consumer. When has government been efficient?

  • When will Congress

    When will the Republican’s in Congress get audited for having stock interest in UPS and FedEx?

  • Citation

    “USPS operating expenses have in fact decreased every year since 2007.”

    Citation please.

  • seen it all

    Hey Edd, who will deliver mail to all the rural addresses and small towns in this country when it is no longer considered “efficient”? Our founding fathers decided it was in the best interest of the nation to build a postal service that provided equal access to everyone regardless of their location, but I guess you know better, huh?

  • brian

    Citation- USPS Annual Reports.

  • barf

    Why would you want to privatize anyway…We have the best minds in the business world at the helm…Just ask them.

  • paul

    who funds the cato institute?

  • Expenses are flat & revenue decreases every year

    “USPS operating expenses have in fact decreased every year since 2007.”

    This is false using the prior year as a baseline if the citation is the USPS Annual Report:
    “Dollars in milions, audited”
    2008 Operating Expense = $77,738
    2009 Operating Expense = $71,830
    2010 Operating Expense = $75,426

  • brian

    The reason 2009 was lower than 2010 was that Congress forgave $4 billion of the pre-funding requirement. That was a political decision, not an operating decision. In terms of actual expenses for operating the business, costs have gone down each year since 2007.

  • Cato

    Brian – good point about 2009. In fact the Cato authors agree with your contention: “the flexibility of the USPS to adapt to changing market forces is greatly hampered
    by congressional restrictions placed on it.”
    And . . .
    “Despite rising health obligation costs, the USPS was able to reduce its operating costs by about $6 billion in response to the rapid decline in revenue during 2008–09. Through aggressive cost cutting, the USPS reduced the number of employees and overtime, renegotiated with suppliers to obtain more favorable terms, reached agreements with its unions to expedite the adjustment of delivery routes, imposed a moratorium on new construction, provided retirement incentives for about 30,000 employees, and eliminated nonessential programs and projects.”
    But here’s the kicker . . .
    “However, even ignoring the accelerated health prefunding obligation, these decreases in costs were less than the decreases in revenue, resulting in increasing losses for the Postal Service and an increase in outstanding debt.”
    So during this time of decreasing operating expenses the balance sheet was hemorrhaging all over the place . . . .
    “After realizing modest profits during fiscal years 2004–05, the USPS lost $0.9 billion in 2006, $5.3 billion in 2007, $2.8 billion in 2008, $3.8 billion in 2009, and $8.5 billion in 2010. From fiscal year 2006 to 2009, its debt increased from
    $2.1 billion to $10.2 billion. This resulted in the U.S. Government Accountability Office’s placing the USPS on its “high risk” list in 2009 (U.S. GAO 2009a). Simply put, the financial problems of the USPS are not going away as future trends suggest stagnant-to-declining revenue and stable-to-increasing expenses: a fundamental change has occurred in the business outlook of the USPS.” What an understatement of reality!

  • brian

    I think everyone’s well aware of what you talk about in your post, but it doesn’t change the fact that the report said USPS operating costs were rising, when the fact is that they aren’t. That’s all I said, and it happens to be true.

  • barfola

    “from 2006 to 2009, …debt increased from $2.1 to 10.2 billion.”

    And look at what happened in 2006: Law for prefunding of retiree health benefits.