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Postal Projections for 2010
Spark Predictable – and Misplaced – Alarm
Burrus Update #20-2009, Nov. 30, 2009
The Postal Service’s Integrated Financial Plan for Fiscal Year 2010 projects losses of $7.8 billion, and major mailers and USPS executives — along with some members of Congress — have pointed to this grim forecast as evidence that the Postal Service needs a major overhaul in order to avoid collapse.
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Earlier this decade, a similar rationale was repeated often to justify postal “reform,” and dire predictions culminated in the enactment of the Postal Accountability and Enhancement Act of 2006 (PAEA). The opening line then was that “the Postal Service must adopt a new business model.” Over the protestations of the APWU, the predictors of doom “succeeded” in passing this dreadful legislation.
History will show that the PAEA is a dismal failure, and the promises of stability are unfulfilled. The PAEA included a requirement that the USPS prefund the costs of future retiree healthcare benefits in staggering amounts — at a time when mail volume plummeted because of the depressed economy.
The timing could not have been worse; but even setting aside the unexpectedly large decline in mail volume, this bill was the most devastating legislation ever imposed on the United States mail system.
Three years later, the prognosticators that brought us the PAEA are again beating the drums for “postal reform,” using management’s 2010 financial predictions as their rallying cry.
The USPS financial projections for FY 2010 [PDF] include a net loss of $7.8 billion — of which $7.7 billion is attributed to payments for Retiree Health Benefits. Without this cost, projections for 2010 would estimate a loss of just $100 million. This may sound like a lot of money, but out of projected revenue of $65.9 billion, it is a tiny amount — a variance of just .152 percent.
Absent the requirement to prefund retiree healthcare benefits, the Postal Service’s projections for 2010 would reflect a company that has controlled expenses to match expected revenue. Only in a world of postal fantasy would this bring cries of alarm.
William Burrus
President
