“The situation now, as you can see, is fairly precarious. When you have roughly $4 billion of cash, and over $100 billion in liabilities, it doesn’t take a genius to figure out we’re in a financial crisis.”
—USPS Chief Financial Officer Joseph Corbett,
Wall Street Journal online edition, June 18, 2014
June 18, 2014—Poor Joe Corbett. The Postal Service’s chief financial officer probably finds it hard to get out of bed each morning, knowing that his bank account holds only a fraction of what he owes on his home mortgage, car loan and credit cards. Then he has to go to work at the Postal Service and face, what he thinks, are the same daunting financial circumstances.
Of course, most Americans—geniuses or otherwise—know that comparing your total liabilities over the next several decades to a small fraction of your assets that’s held in cash is probably not the right way to approach the problem.
Kidding aside, Corbett, who was interviewed for a Wall Street Journal online edition blog post, knows perfectly well that he’s blowing smoke. The chart that he provided The Journal, comparing the Postal Service’s “total liabilities” to its current and projected cash balance, is designed to bamboozle readers into buying USPS’ plan to continue to dismantle the nation’s invaluable postal networks.
CFOs of major companies don’t compare their liabilities by comparing them to their companies’ cash balances. Rather they compare total liabilities to total assets. (See the NALC chart below).
This bogus comparison was designed to convince Journal readers that the USPS is near collapse and that its radical downsizing is in order. Corbett has been peddling this misleadingly selective liabilities chart for months to convince Congress that it’s time to radically slash services to the tens of millions of American businesses and households who rely on the Postal Service to conduct business and to communicate every day.
USPS wants to end Saturday delivery and phase out door delivery to tens of millions of homes and businesses, in favor of cluster boxes. We think there is a much better way. We need fundamental reform to dramatically reduce the pre-funding burden, change how the retiree health fund is invested, improve USPS’ pension valuations, and modernize our pricing and new-product regulations.
So, let’s set the record straight.
Yes, the U.S. Postal Service’s financial situation is fragile, thanks mostly to Congress, which imposed a crushing mandate on USPS in 2006 to pre-fund decades’ worth of future retiree health premiums over the past seven and a half years. Indeed, 83 percent of the $47 billion in USPS losses since 2007 are due to the pre-funding expenses, a burden no other company in America faces.
And although the Postal Service’s $4 billion cash balance is dangerously low, it’s up dramatically from its level of $1 billion in 2011.
That’s because the Postal Service has bounced back from the Great Recession. As the economy has slowly rebounded, USPS has recovered on the strength of booming e-commerce deliveries and growing advertising volume, which have more than offset the decline in First Class Mail due to Internet diversion.
Indeed, over the first two quarters of 2014, package revenue growth of $730 million strongly outpaced the $230 million decline in letter mail revenue.
If the Postal Service wanted to have an honest discussion of liabilities, it would not just show unfunded liabilities marked to market with current interest rates. Nor would it ignore it assets, similarly marked to market.
The NALC chart below offers a more accurate picture of the Postal Service’s assets and liabilities. Although the chart leaves out workers’ compensation liabilities, which have been temporarily inflated due to record low interest rates, it shows that the Postal Service’s pensions are nearly fully funded and that the USPS has pre-funded a much greater share of future retiree health benefits than most, if not all, Fortune 1000 companies. Indeed, two-thirds of such companies don’t pre-fund retiree health benefits at all.
The NALC chart also shows that, with its real estate carried at market value, the Postal Service’s overall financial picture is stronger than Corbett tried to suggest with the chart he provided The Journal.
Indeed, if the Postal Service or the Office of Personnel Management were allowed to invest USPS’ $290 billion retiree pension fund and its $47 billion retiree health fund in a safe mix of long-term index funds offered by the federal Thrift Savings Plan, the Postal Service’s liabilities would be massively over-funded. (Under current law, these funds must be invested in low-yielding Treasury securities.)
We doubt many of The Journal’s sophisticated readers or writers fell for what Corbett was peddling. But the Postal Service clearly hopes Congress will.
Say it ain’t so, Joe: USPS CFO tries to bamboozle the WSJ
Mr. mrod, with the scanners and gps machines, how is it possible to steal time? You most likely have never worked for the Postal Service! Stick to what you know about, don’t make up lies.
Hiya Hunter, how’s tricks in 204b land, ya mgmt suckup.
Actually, the biggest and loudest complainers go into postal mgmt.; it was their only option, since they couldn’t handle the craft WORK.
I work with so many people like “Hunter”: no matter how big the problem is surrounding him, all he does is look around to see who is doing less than him!
Seriously Hunter, did you read the article? Did ANY of that bother you if you did? You really should stick to reading the comics!
Some of us would think in a realistic world that after truckloads of reports from the USPS that have proven to be not just off, but horrendously so, Donohoe lying to Congress and then advocating Eric Cantor’s bright idea of robbing the USPS for highway funding would be enough to convince the President and the BOG that a massive removal of top level management starting with Donohoe was the most important step toward meaningful reform the Service needs right now.
But this isn’t a realistic world, or should I say a fair world? Donohoe is untouchable unless the four unions and the public at large launch a massive campaign for his removal. That involves your local Representatives and Senators. If your legislators are GOP, don’t waste your time. But if they’re independent or Democratic, you could bombard them with demands of resignation. But again, that’s in a fair world and most of us are not ambitious enough to do it. My legislators are GOP, and one Democrat senator who votes GOP 90% of the time, so for me it’s pointless.
You’d think after being lied to over and over somebody who could do something would be pissed off, but Capitol Hill is nothing if it isn’t a cult of pathological liars and thieves out to kill the country dead. I have no faith or confidence in anybody in Washington, D.C. regardless of party. I heard somebody say the U.S. was the largest hypocrisy in the world and I agree.
question? when do you know when post office management is lying? answer “when they start talking” they practice lying on a grand scale. they all should be removed.
Have too many carriers milking the clock and stealing time
The Post office is turning into a small workforce since the only thing that’s keep us in business is packages.
Can anything but lies and deception be expected of Postal Service mismanagement?
Well said Matt.
“TSP” thanks for your illuminating input. By the way, if the USPS was allowed to run like a business you probably wouldn’t have a job. Usually the biggest and loudest complainers are the biggest dogs.
You said a mouthful Matty T!
Maybe ISSA another Joe The Plumber ?
Postal mgmt likes to tout the “run the USPS like a private business” line.
They should be careful what they ask for.
In a private business, with the reported losses of the USPS (if you believe the numbers…), they all would have been rightfully fired long ago, for their incompetence.
godspeed to anyone who reads’ understands’ or cares about this mind blowing crap. I need a beer.