Will the U.S. Postal Service Become the Next Greece?
December 7, 2012
Concerns over the perilous financial condition of the U.S. Postal Service have caused some observers, including its own Postmaster General Patrick Donahoe, to compare the agency’s prospects to the spiraling economic crisis in Greece. While the scope of the problem warrants the comparison, the Postal Service’s reaction to its own bleak budgetary prospects offers some encouragement, according to Tax Foundation fellow Michael Schuyler:
Although the postmaster general has made the Greek analogy only a few times in passing, the topic is worth considering in more detail. Greece's disastrous experience holds valuable lessons, applicable to the Postal Service, regarding the dangers of large and persistent deficits and the desirability of addressing financial problems sooner rather than later….Postmaster General Donahoe used [the comparison to the crisis in Greece] to help people understand the peril to mail users if the Postal Service were to resist the operational changes needed to control its costs.
Worries over the future of the USPS (and the potential burden on future taxpayers for pension and health care costs of postal workers) were reignited recently when the Service announced its largest-ever annual loss last month.
The U.S. Postal Service reported a record annual loss on Thursday and warned that, without congressional action, it could face a cash shortfall next fall. The mail service said it lost $15.9 billion in the fiscal year that ended on September 30. That is more than triple its $5.1 billion loss last year. The USPS, which relies on the sale of stamps and other products rather than taxpayer dollars, has been grappling for years with high costs and tumbling mail volumes as consumers communicate more online.
Read more on how the U.S. Postal Service could be be learning lessons on profitability from other international postal agencies.
Follow Richard Morrison on Twitter at @RichardMorrison.
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