Good numbers for the federal deficit; questionable USPS business strategies

The release of President Trump’s first proposed budget on May 23 garnered a lot of attention. It was titled: “BUDGET OF THE U. S. GOVERNMENT, A New Foundation For American Greatness, Fiscal Year 2018.” The President’s Budget deals extensively with the U.S. Postal Service, an agency that can have a significant impact on the federal deficit. The budget projected potential deficit reductions of $22 billion in the next five years, and $46 billion over ten years:

The USPS reacted to the budget with this statement to its employees:

We are still analyzing the proposed budget to determine what impact it might have on the Postal Service and our employees in the event it becomes law. In that regard, it is important to note that the release of the president’s proposed budget is just the first step in the annual budgetary process. Ultimately, the budget must be passed by Congress, and at this point, there is much work to be done before this budget proposal becomes law. That said, we do appreciate that the president’s proposed 2018 budget recognizes the need to enact postal legislative and regulatory reform. Both are essential to enabling the Postal Service to meet its obligations in a financially sustainable manner. The Postal Service looks forward to continuing to work with the administration and with Congress to enact postal reform legislation.

USPS released this statement to customers: The U.S. Postal Service appreciates that the President’s proposed 2018 budget recognizes the need to enact postal legislative and regulatory reform. Both are essential to enabling the Postal Service to meet its obligations in a financially sustainable manner. The Postal Service looks forward to continuing to work with the Administration and with Congress to enact postal reform legislation.

The USPS section in the Appendix (page 1207) to the budget is titled, “Postal Service Fund” because USPS is off-budget but runs all its cash through this fund in the U.S. Treasury. What the federal government cares most about is getting more money to run through its account. Or as the budget says, “…ensure that the Postal Service funds existing commitments to current and former employees from business revenues not taxpayer funds.” Make sure the customers pay for the obligations negotiated by postal managers or imposed by federal arbitrators and lawmakers.

The budget reiterates most of the “reform” measures that have been proposed in recent legislative attempts and President Obama’s budgets. These include:

1. Authority to reduce mail delivery frequency, i.e., five-day delivery.
2. Collaborate with State and local governments.
3. Shift to centralized and curbside delivery.
4. Enhance governance.
5. “[R]equiring the future rate structure for the Postal Service to provide enough flexibility to ensure both the stability of Postal operations and the ability of the Postal Service to meet its statutory obligations for retiree health and pension costs.”
6. Government-wide reforms to pensions and health insurance costs.
7. Make USPS contributions to health and life insurance consistent with all other federal employees.
8. Have the Office of Personnel Management use postal-specific assumptions when calculating pension obligations, including investment returns.

While these actions might lead to the projected improvements in the Federal budget deficit, it remains very unclear whether they are good business decisions for the USPS. It also is very uncertain whether they will advance in Congress any more than in the past.