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May 04

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Congress should get out of the way of USPS’s restructuring efforts

On April 25, 2012, the 21st Century Postal Service Act of 2012 (S.1789) passed the Senate. The legislation has not been substantively considered by the House, and will probably die the death that it deserves. S.1789 is a bad idea because it provides limitations on what the Post Office can do to stem its considerable losses. Among other things S.1789:

 

 

 

 

 

  1. Prohibits a mail delivery schedule of five or fewer days per week
  2. Requires the post office to give customers 60 days notice of changes in service
  3. Requires reporting of progress in one year (way too much time)

Last November, I wrote about this issue, concluding that Congress needed to stay out of the Post Office restructuring. Nothing has changed my prior conclusion.

On February 23, 2012, the U.S. Postal Service announced plans to consolidate 223 mail processing centers. The USPS said that it needs to save $20 billion annually, and that the eliminated locations would reduce costs by around 10% of this amount. The closures would occur staring on May 15 (two weeks from now) because of a moratorium the USPS imposed on itself to give Congress time to provide new funding. So far, Congress has not provided the money. Instead, the leading effort is S.1789 (described above), which places restrictions on what can be done.

The complaints about eliminating a mere 233 post office locations are predictable, but still ridiculous. Instead, let the USPS do what is needed to save $20 billion annually. This means (i) immediately eliminating hundreds of additional post offices, (ii) reduce postal deliveries to five days a week, and (iii) forget all the procedural wrangling, notices, and appeals that are slowing down the necessary restructuring.

Our firm assists companies in financial difficulty to restructure. We would never participate in a process similar to what Congress is doing with the USPS. The USPS management needs to be unshackled so that they can do what will provide a complete solution.

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2012/05/congress-should-get-out-of-the-way-of-uspss-restructuring-efforts/

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