USPS hits back over claims that it is “incapable of financial accountability”

On Monday last week (10 April), the USPS reported a net loss of $586m for the third quarter of fiscal 2015 – which was actually a reduction of $1.4bn from the net loss of $2bn for same period last year.

On Thursday, Justin Sykes, the Federal Affairs Manager for the Americans for Tax Reform, posted an opinion piece on his organization’s website which stated: “The USPS’s ability to lose over half a billion dollars in just three months would almost be impressive if it wasn’t a detriment to American taxpayers. The fact is the USPS receives roughly $18 billion in taxpayer-backed subsidies annually yet is still failing.”

Sykes went on to claim: “Despite this massive multi-billion dollar subsidies crutch, the Postal Service continues to prove incapable of financial accountability. The third quarter losses this week are not only a massive bureaucratic failure but also mean the Postal Service has now posted revenue losses 25 out of the last 27 quarters.

“Given the $1.5 billion dollar losses posted in the previous quarter, 2015 could be the 9^th consecutive year USPS has suffered multi-billion dollar losses. The Postal Service is now averaging about $5.5 billion in annual losses and within the last decade the Post Office endured over $47 billion in losses, a number that is only slated to grow.”

The USPS hit back with a riposte posted on its website yesterday (17 August), in which it described the Americans for Tax Reform column as “overtly flawed and significantly exaggerated”.

The USPS statement continued: “The entire piece is based on a competitor-funded paper fraught with errors about the financial status of the Postal Service that the Americans for Tax Reform organization unquestioningly parrots.

“The writers of both documents fail to report the truth — that the Postal Service receives no tax dollars or subsidies for operating expenses and relies on the sale of postage, products and services to fund operations.

“The writer also makes no mention of the incredible cost savings the Postal Service has achieved. The Postal Service has proactively down-sized its network from 675 processing facilities to 318 over the last 10 years, and enacted other savings initiatives reducing our annual cost base by over $15 billion per year, an extraordinary cost savings by any measure.

“The ‘subsidy’ numbers referred to in the column and paper are created by flawed methodologies and assumptions, apples-to-oranges comparisons, and a one-sided narrative.

“The document claims that the Postal Service’s economies of scale and scope are a ‘subsidy’ resulting from the organization’s monopolies. This is completely incorrect.  In fact, the opposite is true.  The Postal Service has a universal service obligation to deliver to each and every address in the United States, six days a week, regardless of the volume of mail destined for each.

“Without any support, the piece accuses the Postal Service of failing to be financially accountable. Yet nowhere in the article does the writer discuss the fact that the Postal Service is constrained by a price cap tied to inflation for the overwhelming majority of its products or that the Postal Service has billions of dollars in unique burdens placed upon it, like the requirement to prefund its Retiree Health Benefits, something no other private entity is required to do.

“Americans for Tax Reform owes readers a more accurate, better researched and fact- checked representation of the financial situation of the United States Postal Service. The inaccuracies contained in the column are a disservice to the American public.”

Toni DeLancey, a member of the USPS Corporate Communications, also posted the USPS statement on the Americans for Tax Reform website as a comment on the Sykes article. This sparked a thread about government subsidies, taxes and community service that was still going on as we published this news story.