GAO report ignores the obvious

The Government Accountability Office (GAO) has released a brief report suggesting three options for “reforming” the US Postal Service. You can find some interesting analyses of the report at Save the Post Office and the Courier Express and Postal blog.

But the most amazing part of the report to me is the first paragraph. It states:

Over the previous 4 years, USPS experienced a cumulative net loss of just over $20 billion.

Nowhere in that paragraph, or indeed in the rest of the report, does the GAO mention why the USPS suffered that loss. The report talks about declines in mail volume, but ignores the billion dollar elephant sitting right in front of it: the simple, undisputed fact that despite a drop in volume and a recession, the USPS would have made a profit during that period if it had not been required to divert $5.5 billion a year to an on budget trust fund for hypothetical future retirees’ health benefits.

By ignoring the main cause of the USPS’s financial problems, this report makes something else blindingly obvious: the GAO is a creature of Congress- and it intends to tell Congress exactly what Congress wants to hear.

GAO Report (pdf file)

  • M. Jamison

    GAO has some sort of death wish for the Postal Service, either that or they’re in on the PMG’s contest for the most dire headline of the month.
    The numbers in this report simply don’t add up and, as usual, completely ignore the things that would likely sustain the Postal Service like “last-mile” delivery. It also is beyond comprehension that the leaders of the USPS seem to have made no effort to develop a bill presentment and payment service for the un-banked. Bill presentment and payment is a significant segment of the first class market and there is a tremendous opportunity to leverage the postal retail network into a product that transitions the Postal Service into new areas.
    Of course that wouldn’t suit the narrative of dismemberment and privatization.
    The timing of the GAO report makes one wonder if some of these announcements haven’t been coordinated to undermine the push back against attempts to destroy postal services in this country.

  • Retired HQ

    “Bill presentment and payment service for the unbanked”

    Have you ever heard of money orders? Go to a lower income neighborhood around the 1st of the month and see how many customers are in line for money orders. That is what the unbanked use. What other product would you like to offer?

    Besides which, is your solution to the problem to pursue the segment of the market that is Unbanked. While they certainly need products and services to meet their needs (as indicated already available), this is not the part of the market that has money to spend on postal products and services. Who in their right mind would look at the current situation and determine the best approach is to go after the segment of the market that has the least money.

  • M. Jamison

    The segment of the market that has the least money, which is something like 50% of the population, is the raison d’etre for the Postal Service and the universal service obligation.
    As utilities and others move towards requiring electronic payment or charging for other forms of payment there is a need for an entity that can accept payments and transfer them electronically. There are a good many folks who cannot or will not use current electronic payment methods. It is a natural market for an entity charged with universal service. The recent OIG report RARC-WP-12-001 talked about the potential of 74 million customers for this type of service.
    And Retired HQ I’ve sold those money orders so I’m well aware of the need – and how we could do it better and more efficiently and probably make more money off the transaction by providing a service to both parties.

  • Retired HQ

    “50% of the population” – better check your data.

    US Population is 311 Million, so 74 Million is about 24% of the population. You have determined that this group is “the raison d’etre for the Postal Service and the universal service obligation”. I disagree, but that is for neither you nor I to decide. It is a public policy issue.

    If Congress and the President want USPS to function as a public service and not as a business-like enterprise, then so be it. However, it also means that USPS cannot continue as a self-sustaining entity. Rather, it must be subsidized to perform such a role.

    Let the elected officials make this decision.

  • M. Jamison

    It can be both and it has effectively been managed as neither.
    The number from the OIG report is a segment of the 50% but I won’t quibble. How about we make that 50% the 99%, a number that fits well with the current news?
    Yes, let’s have our elected officials make that determination although the mandate for universal service is pretty clear as currently stated. The fact that the folks at HQ have apparently seen that as a secondary priority and managed accordingly has served neither mission well.
    We already provide inherent subsidies to non-profits and to some extent the direct mail industry through a convoluted rate system. The institution can be both universal and self-sustaining. That would take clarity from Congress and an effective management that wasn’t seduced by its own groupthink.
    At this point the prospects for that are questionable but one can hope that this important institution can still be saved from the feckless and the myopic.

  • crazy

    Very simple: the USPS was a cash cow for the government back in the 80’s and 90’s. The government didn’t hesitate to take money from them. Now, the USPS is in trouble, and most of the government wants to look the other way. And if I remember right, elections are right around the corner, so you know that there will be false promises made so these so-called elected officials can get or keep their cushy overcompensated positions. Democracy, yea right. The USPS has now become the scapegoat for all problems. Internet has hurt the USPS, but not as bad as it is being made out to be. When in doubt, place the blame on the front line workers while keeping an overabundance of management safe. Kill the USPS, so millionaire Issa and his side kick Ross can get rid of the middle class. Only in America!

  • crazy

    And as far as the billions of dollars in overfunding, somewhere between 40 and 100 billion from what the many stories have said, the government HAS SPENT IT ALL, starting when good old GWBush pushed the 2006 prefunding law through a lame duck Congress before he left office. Sound familiar? The USPS once again a cash cow for the government!! The GAO has conveinently spun the story around lately to whatever the government wants it to say because the government wants to cover up the fact that there is no money left to return!! So what do the majority in government want to do, dismantle the USPS and make it the scapegoat! That’s why the government has always wanted to hang on to the USPS, to take money from it whenever and put the blame on it whenever, especially around election time, because it is “still part of the government” Thank God that there are people in Congress that want the USPS to succeed and realize that it is still a valuable part of every day society.HR 1351 is the bill that would help the USPS. Check it out. Don’t count the USPS out; help save it!

  • steve

    The GAO has always had theirs heads up their …. When I worked intel at SAC HQ way way back and their report on the B-1B bomber was so full of holes, now again with their report here on the USPS