GAO Reports Urgent Need for Postal Reform as USPS Celebrates Achievements

Issue Brief

A February 2002 General Accounting Office report concludes “The U.S. Postal Service’s ability to fulfill its mission by providing the current level of universal postal service at reasonable rates on a self-supporting basis is at increasing risk.” Among GAO’s findings:

• USPS’s basic business model is not sustainable, and tinkering with the existing system will not be sufficient to transform the USPS to fulfill its mission in the 21stcentury.
• Strong and proactive leadership from the Board of Governors and the Postmaster General is needed to guide the Postal Service.
• A detailed transformation plan, transparency in Postal Service financial records and the timely reporting of financial results are required for better understanding of the Postal Service’s financial performance.

The Postal Service news publication, Hardcopy, reports that its Breakthrough Productivity Initiatives program has achieved a total savings of $2.8 billion since its inception in FY 2000. However, hold the celebration — savings for the Postal Service are perishable. Productivity declined 1.1 percent for the first quarter of FY2002 relative to the same quarter of FY2001. Further, data through February indicate revenue continues to lag further below plan than expenses, indicative of further productivity losses. While difficult to assess, since the Postal Service has not posted a quarterly financial report on its web site so far this year, nearly one-half of these savings could be rescinded by year’s end.

This pattern of gain/give-back has come to be typical of Postal Service performance. (See Lexington issue brief, 7/17/01, “U.S. Postal Service Productivity: The Yo-Yo Effect,” https://lexingtoninstitute.org/postal/yo-yo.html.) It would be hard to imagine that these business-as-usual performance results reflect the sort of new, proactive leadership called for by GAO.

— Lexington Institute Adjunct Fellow Charles Guy, Ph.D. is the former Director, Office of Economics, Strategic Planning, U.S. Postal Service.