NALC: Congress turns $200M USPS profit into $3.2B loss - postalnews blog

NALC: Congress turns $200M USPS profit into $3.2B loss

WASHINGTON, Feb. 9, 2012 –  Despite the headline on its press release, the U.S. Postal Service announced today a net operating profit of $200 million delivering the mail in the first quarter of FY 2012 – an impressive achievement given the current economy. (Postal Service Chief Financial Officer Joe Corbett announced this profit on a conference call with reporters today.)

As the USPS notes, its performance was boosted by record employee productivity and by “stronger-than expected holiday shopping activity, driven by strong growth in online merchandise sales” – up 7 percent over the first quarter of the previous year. That shows the potential for growth offered by the Internet.

The record productivity and the strong growth in the shipping business show that the Postal Service can be a successful organization if freed from the unwarranted and uniquely onerous pre-funding burden placed on it by Congress.

The operational profit turns into red ink only when an external factor unrelated to mail delivery is considered – the 2006 congressional mandate that requires the Postal Service to pre-fund its future retiree health benefits over the next 75 years within a decade. That, along with a non-cash actuarial adjustment to the Postal Service’s workers’ compensation costs, is entirely responsible for the $3.3 billion “loss.” The pre-funding alone accounts for $3.1 billion of the quarter’s “loss.”

These results reveal the need for Congress to remove the crushing burden of the pre-funding payments, which the USPS is compelled to make, as its press release notes, “at rates not assessed any other entity in the United States.”

  • cpttuna

    you can’t beat the guy with the pencil.

  • reogurl

    ABOLISH PAEA, PROBLEM SOLVED!

  • Viper

    this article is incorrect. 3.3 billion dollar loss with 3 billion going toward prefunding leaving still a 300 million dollar loss. online sales growth only produced $179 million compared to a loss of $650 million in 1st class mail. do the math…they are still losing money whether they prefund or not. They need to make cuts in days delivered, management and workforce. No ifs ands or buts about it. Business 101.

  • admin

    No, the article is not incorrect. It does NOT say that the pre-funding was solely responsible for the loss- it says “That, along with a non-cash actuarial adjustment to the Postal Service’s workers’ compensation costs, is entirely responsible for the $3.3 billion ‘loss.’”
    Which happens to be true.

  • Mail To Issa

    Someone should send this to Darrell Issa and Dennis Ross, CNN, MSNBC. And “Faux News”!

  • David

    Congress and President Obama are both engaged in a ridiculous and irresponsible charade regarding Postal reform and finances. Where is the leadership? Of course most if not all USPS red ink is attributable to reckless mandates. Yet the whiff of an impending financial bloodletting inflicted upon Postal employees, pay and benefits is in the air. Both sides will procrastinate to the very end in this dicey election year. The tea baggers won’t give an inch and the Dems and Obama will hold their noses and capitulate to avoid a shutdown of mail service when we run out of money and borrowing power this fall. Dear Postal Employee:thinking about that new car or widescreen television? Think again! At least until after the election.

  • viper

    Admin~ read the financials…where do you see a profit?

  • hrdcorefan

    Postal Service Chief Financial Officer Joe Corbett announced this “profit” on a conference call with reporters today.

  • gary

    To ” Mail To Issa”, viper, probably is Issa and he knows; yet his motives dictate servicing another cause, rather than, postal patrons.

  • jmart

    Viper, it’s not a sound business model to cut a day of delivery, which = a 17% cut in deliveries in order to save 3% in costs. That is definitely NOT Business 101. That’s a recipe for business failure.