GAO: Post Office is "High Risk" Area of Government Mismanagement

Posted: Feb 14, 2013 10:54 AM
The Government Accountability Office issues biennial reports on "high risk areas" of government, which they define as having "greater vulnerabilities to fraud, waste, abuse, and mismanagement or the need for transformation to address economy, efficiency, or effectiveness challenges." The U.S. Postal Service has been on the GAO's list since 2009, and they've made the list again in the report released today. What's troubling about this report is that the viability of the USPS gets worse every year, with very little changes made.

The GAO makes this explicit in its evaluation of the USPS' finances:

The USPS has had long-term plans to address its deficit, which include moving to five-day delivery, eliminating up to 55,000 jobs, and closing processing facilities. Unfortunately, it's largely workers' unions and members of Congress themselves standing in the way of modernization and reform.

The National Association of Letter Carriers, one of the major postal unions and an affiliate of the AFL-CIO, has been steadfast in its opposition to the most viable postal reforms and incredibly effective in lobbying on Capitol Hill to resist reform. Just after Postmaster General Patrick Donohoe announced USPS' plans to move to five-day delivery, the NALC went on a blitz, getting members of Congress on the record and touting the introduction of a bill from Democrat Sens. Bernie Sanders, Kirsten Gillibrand, Patrick Leahy, and Ron Wyden that would allow Congress to override the USPS' attempts to modernize. The Democrats would maintain six-day delivery, refuse the closure of redundant postal facilities, and alter the accounting of USPS' retirement benefits to make it look like the Postal Service is in better shape than it is.

The GAO's report should cause these Democrats to reconsider. It's obvious that the NALC is just looking to protect jobs for their union members despite the drain on the Postal Service, but the Democrats should be better.

As AEI scholar Richard Geddes testified to Congress yesterday, the Postal Service defaulted on over $11 billion of retiree benefits last year. Though the USPS is not designed to be an on-budget federal government operation, taxpayers will ultimately be on the hook. The USPS monopoly has actually been one of the major impediments to reform, Geddes says.

Postal laws should be reformed to allow the Postal Service to use its most valuable asset – the network that gives it the ability to deliver mail to every address on a regular basis – in new and innovative ways to meet existing demand and to offer new delivery products.

There's value in the Postal Service, but its current structure is what lands it on this GAO "high risk" list for waste, fraud, abuse and mismanagement. There's a lot that needs to be done and, to its credit, the USPS management has seemed so far committed to emerging from its fiscal nadir as a better organization. Even if the USPS doesn't follow the wave of sweeping privatization going on in other countries, there's a laundry list of necessary reforms. The people who are in charge of its stewardship should know better and heed the GAO's report.