Postal Service Must Come Clean on Costs

Early in 2015, the U.S. Postal Service will welcome a new chief executive — Megan Brennan, the first female postmaster general in the agency’s 200-plus-year history. She’ll have her work cut out for her.

The agency, thanks to its badly broken business model, is losing money at a calamitous pace. This year, USPS lost $5.5 billion. In the last five years, it’s lost $40 billion.Worse, the Postal Service has maintained a culture of secrecy around its finances. Amidst these unprecedented losses, and the looming possibility of a massive taxpayer-funded bailout, improving financial transparency should be a critical priority for the agency.

The Postal Service is badly in need of a new accounting system, as reports issued in the past year by both its inspector general and the Postal Regulatory Commission have determined. The obscure and arcane system the Postal Service now uses doesn’t accurately measure its expenses. The agency only attributes about half its operating costs to specific products or services. It tabs the rest — tens of billions of dollars — as “overhead.”

Before it can right its finances, the Postal Service must adopt a more transparent accounting system, one that attributes all costs to the products and functions that impose them.

To read Don Soifer’s full op-ed as published in The Detroit News , please visit the Lexington Institute’s website.