PRC’s Taub: USPS faces “very serious” financial problems – but there is “strength in the system”

PRC’s Taub: USPS faces “very serious” financial problems – but there is “strength in the system”

Robert G. Taub, the Acting Chairman of the US Postal Regulatory Commission (PRC), has warned that the US Postal Service (USPS) faces “very serious and real financial problems” – but added that “the good news” is that there is “strength in the system”. Taub, who was testifying at yesterday’s (11 May) US House Oversight and Government Reform Committee hearing on postal reform, said that there were a number of issues that have impeded USPS’s efforts to stabilize its financial position – but emphasised: “The fundamental problem is that the Postal Service cannot currently generate sufficient funds to cover its mandated expenses and also invest in critically deferred capital needs.”

Taub added: “Despite the very serious and real financial problems, let’s also keep in mind the good news – the strength in the system – and take some degree of hope knowing that this is the foundation that Congress and the Administration can build upon to find solutions.”

The PRC Acting Chairman’s testimony focuses on the following points and arguments:

  • Losses since 2007 have negatively impacted liquidity, and, as a result, impede the USPS’s ability to make “critical” capital investments in infrastructure
  • USPS’s inability to make required payments to the retiree health benefit fund has skewed its liabilities in relation to its assets
  • The historic decline in total mail volume
  • The increase in revenue from Competitive products is insufficient to offset the future revenue loss from removal of a temporary surcharge
  • USPS is an “essential” of the US national  infrastructure and a significant driver of the economy
  • The need to better define the universal service obligation and its cost
  • The PRC’s upcoming 10-year rate review, which is scheduled to commence December 2016

Taub concluded his presentation by asking, “Where can we look for answers? I would argue that the starting point is to look at ourselves. What do we as a Nation need from a postal and delivery system and what is its cost? What exactly is universal mail service in the United States?”

Click here to a view a PDF of Taub’s written testimony.

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