In my daily download of GAO reports, this testimony on the financial condition of the USPS caught my attention. The really eye-popping part was at the very bottom:
Increasing postal rates may provide a short-term revenue boost but would risk depressing mail volume and revenues in the long-term, in part by accelerating diversion of mail to electronic alternatives. USPS has asked Congress to change the restrictions established by PAEA so that it could offer new nonpostal products and services such as banking and insurance. Allowing USPS to compete more broadly with the private sector could lose money, and fair competition issues would need to be considered. Thus, in addition to its revenue-generation initiatives, USPS will need to continue making significant reductions in its workforce and network costs. When we recently added USPS’s financial condition to our high-risk list, we said that restructuring will require USPS to align its costs with revenues, generate sufficient earnings to finance capital investment, and manage its debt.
The USPS has been agitating for the greenlight to expand into competitive businesses for years. It was announced last week that they cut a deal with Hallmark to begin selling greeting cards in post offices.
It is a very bad idea. Instead, the USPS should be fully privatized, after which time they can engage in whatever private business they wish without endangering taxpayers. Read more here. Countries around the globe, including Japan and the EU, are moving away from the monopoly model and toward increased competition and outright privatization.
The USPS is expected to hit its debt ceiling of $15 billion in 2011.
Filed under: Appropriations, Bailouts, Budget, Deficit, GSEs, Privatization, Reform, Waste
