6 Points Donahoe Left Out of His Bailout Rebuttal

In Donahoe’s Answer to Postal Bailout Criticism, we noted the Postmaster General’s recent article explaining that the U.S. Postal Service’s financial straits are a creation of Congress rather than actual financial losses. But the article omits key points, partly because the Postal Service can’t afford to offend Congress right now with the unvarnished truth.

Here are six more things that ignorant critics in Congress and the news media need to consider about USPS finances:

1) Congressional game: The Postal Service is the victim of a Congressional accounting game. What Donahoe diplomatically labels “prepayment to the Retiree Health Benefit fund” was more accurately described by the Office of Inspector General as using “Postal Service funds to make the President’s budget seem smaller.” (See How USPS Could Bypass Congress on Saturday Delivery.)

2) Real conservatism: Why are so many conservatives criticizing efforts to end the “prepayments” when they also claim (correctly, in my view) that the President’s budget is too large? If they understood the situation, I suspect they would conclude that the truly conservative approach would be to end this shell game that misleads taxpayers about the size of the federal deficit. But that would require searching for the truth rather than sound bites.

3) Reforming the “prepayments” is no longer enough: Although accurate accounting of the prepayments, as assets rather than expenses, would have put USPS in the black in recent years, that no longer seems to be the case. The rapidly declining volume of highly profitable First Class mail is overwhelming the Postal Service’s cost-cutting efforts. USPS must find additional efficiencies to balance its books.

4) Not much light in there: The people who claim that the recent APWU labor contract is a giveaway by the Postal Service are engaged in “rectal-cranial explorations”. (That’s a polite way of saying they’ve got their heads up their – well, you get the point.) As someone who works in the news media, I’m embarrassed by many of the news articles and editorials on the contract, which clearly were written by people who hadn’t bothered to look at the contract or to do even a few minutes of research. The pundits tut-tutted about the pay raises for current employees without noticing the more significant efficiency gains, such as pay-scale reductions for future employees and greater use of part-time and temporary workers. (See Is the APWU Eating Its Young? and Junk Journalism and the Bogus Postal Statistic for more on the groundbreaking contract.)

5) Hypocrites: Any member of Congress who criticizes the Postal Service for not cutting expenses enough is a hypocrite. Have you ever heard of a Congressman supporting the closure of a rarely used post office in his district? Donahoe’s article pointed out cost cuts in recent years totaling about 15% of annual USPS expenses and plans for another 25% in cuts. How many members of Congress have advocated specific cuts in the federal budget that even approach that kind of scale?

6) Penny wise, pound foolish: The Postal Service has foregone some investments that would have easily paid off, such as replacing some of its aging, high-maintenance delivery vehicles and revamping some of its facilities. (See Here's How the Postal Service Can Get Back Its Pension and Benefits Overpayments for more on this issue.) But its cash crisis, brought about by the bogus retiree health benefits accounting, has prevented it in recent years from spending a little money to save a lot more.