Taub of PRC – USPS has serious problems but can recover

The Acting Chair of the US Postal Regulatory Commission (PRC) Robert G Taub has warned that the US Postal Service (USPS) faced “very serious and real financial problems” – but added that “the good news” is that there is “strength in the system”.

Taub was testifying at the US House Oversight and Government Reform Committee hearing on postal reform on the 11th May. He said that there are a number of issues that have impeded the postal operator’s efforts to stabilise its financial position. He emphasised however, “The fundamental problem is that the Postal Service cannot currently generate sufficient funds to cover its mandated expenses and also invest in critically deferred capital needs.”

He added, “Despite the very serious and real financial problems, let’s also keep in mind the good news – the strength in the system – and take some degree of hope knowing that this is the foundation that Congress and the Administration can build upon to find solutions.”

The PRC Acting Chairman’s testimony focuses on the following points and arguments:

Losses since 2007 have negatively impacted liquidity, and, as a result, impede the USPS’s ability to make “critical” capital investments in infrastructure

USPS’s inability to make required payments to the retiree health benefit fund has skewed its liabilities in relation to its assets

The historic decline in total mail volume

The increase in revenue from Competitive products is insufficient to offset the future revenue loss from removal of a temporary surcharge

USPS is an “essential” of the US national  infrastructure and a significant driver of the economy

The need to better define the universal service obligation and its cost

The PRC’s upcoming 10-year rate review, which is scheduled to commence December 2016

Taub concluded his presentation by asking, “Where can we look for answers? I would argue that the starting point is to look at ourselves. What do we as a Nation need from a postal and delivery system and what is its cost? What exactly is universal mail service in the United States?”