Postal Service Reports $1.5 Billion Loss In Second Quarter
The United States Postal Service posted a $1.5 billion loss in the second quarter of 2015, bringing its deficit this year to over $2 billion and raising fears of a taxpayer bailout.
The USPS sought to put the best face possible on the news in a press release, pointing out that operating revenue increased by $223 million compared to the same period last year, and that the deficit was smaller than the $1.9 billion loss the agency posted in the second quarter last year.
Moreover, the press release claims the net loss for the quarter would have been just $44 million were it not for a congressional mandate requiring the agency to pre-fund retiree health benefits. (RELATED: Penniless Postal Service Promotes Discounted Rates for Chinese Merchants)
The Taxpayers Protection Alliance, however, took a dimmer view of the news in its own press release on Monday, saying, “After maxing out their $15 billion line of credit with the U.S. Treasury and sustaining $50 billion in losses over the last eight years, there is no end in sight to USPS’s financial decline.”
Noting that the agency’s core function of delivering letter mail remains profitable, the TPA argues that, “Instead of focusing on money-losing ventures like deliveries of flowers and groceries, the U.S. Postal Service needs to focus on their main responsibility—mail delivery.” (RELATED: USPS Getting Into the Business of Delivering Groceries)
According to the USPS, “First-Class Mail and Standard Mail volumes declined 2.1 percent and 1.1 percent, respectively,” in the second quarter, but those declines were offset by a 14.4 percent increase in package volume that drove revenue gains.
The Postal Service ended the quarter with $6.1 billion in unrestricted cash, representing 22 days of operating cash, but the agency acknowledges its current cash reserves “[are] not sufficient to support both operations and prefund retiree health benefits.”
Although the USPS does not receive funding from taxpayers directly, the TPA cites a recent report by economist Robert Shapiro that identifies roughly $18 billion in annual subsidies the agency receives from the government. (RELATED: USPS Gets $18 Billion in Subsidies and Special Privileges)
“When the U.S. Postal Service can’t pay its bills, taxpayers will be on the hook to bail them out,” asserts TPA president David Williams. “It is time for serious reform so the USPS can better manage its finances.”
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