Slate “economics correspondent” isn’t so good with numbers

Among the pundits weighing in on yesterday’s USPS financial report was Slate’s Matthew Yglesias. He’s billed as the web site’s “business and economics correspondent”, so you’d think he’d be fairly good at arithmetic, but I have my doubts…

Here’s some of Matthew’s take on yesterday’s report:

This issue of the payments to retirees is interesting. I’ve heard plausible defenses of it, but at the same time it’s true that private-sector firms don’t account in this way. That said, if you add a $1.3 billion first-quarter loss to a $1.9 billion second-quarter loss, then it looks pretty clear that the USPS would be losing money even without the question of the $5.5 billion.

If you didn’t know better, you would probably come away from reading Matthew’s piece with the impression that the USPS has already lost $3.2 billion, on top of the $5.5 billion it’s supposed to come up with on October 1.

It hasn’t.

Let’s see if we can help Matthew out here. First of all, the USPS’s PAEA pre-funding obligation for this fiscal year is $5.6 billion. Even though the USPS doesn’t have $5.6 billion lying around to send the Treasury, it does take a charge on its books each quarter for one fourth of that amount. This is pretty simple math- if half the fiscal year has passed, then the USPS has already booked pre-funding charges totaling $2.8 billion as of yesterday’s Q2 report.

Now take a look at the year to date “loss” the USPS reported yesterday- it comes to $3.130 billion. That means that without the pre-funding requirement, the USPS YTD loss would be $330 million.

So yes, Matthew, the USPS would still be losing money this year without the pre-funding. But why didn’t you bother doing the math and explaining exactly what that loss would be? Why did you instead leave the impression that the USPS is losing billions even without pre-funding? Why didn’t you mention that 89% of this year’s loss is due to pre-funding? Why didn’t you explain that the USPS has already stashed away $44 billion in past profits to meet the PAEA requirements?

You do know all of that, don’t you?

Slate: USPS losses mount..

  • Hannibal

    This is what happens when nepotism runs rampant like in the Chicago Post Office. Instead of hiring the best execs and managers for the money the job always goes to failed carriers and supervisors who went back to community college in order to get a degree in basket weaving so that their uncle or aunt big wig on canal and Harrison can get them in the door. Someone has to point this out. Branch 11 and 433 w Harrison might as well be run out of the same cubicle.

  • Maillady

    Liars figure and figures lie.

  • Rocket J

    How about you never should have received pay increases when the rest of the Federal Government is frozen. Oh and yes it took all the postal unions to figure out the prepayment was bad after you already received pay increases and paid fourth percent of the per funding bill to congress to leave you alone. Why not let it go in 2006, after all postal employees are paid an average of $10000 more than their counterparts in the Federal Goverment and half of the medical cost than the rest of the federal employees. This is why we should feel sorry that you get to runaway with the system the tax payers started, called the PostOffice???

    • Postal

      Our money is not from taxpayers, like the rest of the federal government. We would be self efficient I the government would leave us alone.

    • common sense

      Where to begin…

      What does PAEA prefunding have to do with pay increases?

      What does this mean in English: “and paid fourth percent of the per funding bill to congress to leave you alone” I recognize the individual words, but you don’t seem to know what they mean…

      “all postal employees are paid an average of $10000 more than their counterparts in the Federal Government”

      Oh? “All”? So if a letter carrier makes $29K a year, you’re telling us that his “counterpart in the Federal Government” makes $19K? Can you give us some more details? Like, you know, which agency has $19K a year letter carriers?

      And not to get too personal, but could I ask what your immigration status is?

    • remkmm

      APWU NALC MAILHANDLER RURAL

      Entry Wages $35,553 $34,752 $34,757 $35,077

      Top Step $51,623 $56,508 $54,027 $52,061

      Full-Time 30 hrs 40 hr 40 hrs Evaluated

    • remkmm

      The 1970 Postal Reorganization Act (PRA) made the Postal Service self-sustaining. It was exempted from the general budget, funding laws, and executive branch control. It’s run as an independent federal agency on its own. It was passed in 1970 to free the old Post Office Department from patronage and political manipulation and to insure that the new Postal Service would operate on a businesslike basis. The Nixon Administration moved the Postal Service off budget shortly after passage of the act to comply with the law’s requirement that the Postal Service Fund be independent of other funds in the U.S. Treasury. Thus, the Postal Service could balance its books on a business cycle.

      The first paragraph of the Act reads:

      “The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.”

  • Jack Frost

    The PAEA should be repealed. Once that is cleared away the real issue of how to downsize the agency can begin in earnest. USPS is losing money UNRELATED to PAEA which will only worsen over time. The trend is down for the PROFITABLE first class mail. Acknowledging that communication has changed is necessary to allow discussion over the best size to meet the new mission. Alaska and Hawaii will have to provide for their residents without an indirect subsidy from USPS mail flights.

  • Pudge

    Rocket J doesn’t have a clue. Neither does the generel public. It really isn’t that tough if you can get past the knee jerk reactions.

  • fred

    Even without PAEA, does retiree healthcare have to be eventually funded? YES. Is postal volume declining? YES. Is it unfair to make future ratepayers pay for the cost of current services? YES. Is the Postal Service losing money even if pre-funding is disregarded? YES. So why do Postal Service apologists want to ignore reality and maintain a twentieth century economic model that doesn’t work in 2013?