“The purpose of accounting, one of my favorite professors used to say, is to give people the information they need to make decisions,” writes the always insightful D. Eadward Tree in Publishing Executive.
“Postal accounting, however, is more like a Rorschach inkblot test: People looking at the same numbers reach widely, and wildly, different conclusions about its finances, depending upon their own perceptions of how the agency should be run,” Tree continues.
The problem for our industry, as Tree explains, is that the publishers are likely to be “caught in the crossfire” in the politically-charged fight on funding.
What’s really going on? Tree breaks down some key facts that make it very hard to get real answers and put lasting solutions in place:
- Before the first whiff of COVID-19, the USPS’ business model was on the brink of being unsustainable.
- The impact of the pandemic hasn’t been as harsh as initially expected … so far.
- We don’t know for how long or indeed at all the current online buying surge will continue.
- Across the board rate hikes, favored by some politicians, are unlikely to solve anything long term and in fact could drive business away.
- The USPS is legally prohibited from declaring bankruptcy, even as they hover on the edge of going broke.
- The push is still on calling for an end to prefunding the USPS retiree health plan, something they long claimed keeps them from being able to run a balanced ship.
- The USPS’s Board of Governors (which for five years didn’t have a quorum) is now tightly controlled by one political party, which could undermine some states that are lobbying for more voting by mail this fall.
- It’s been 10 years since Congress legislated anything more important than naming a few post offices; any significant change in how the Postal Service does business has to come through changes in the law.
Meanwhile, the $2 trillion dollar federal CARES act announced in April included billions in stimulus for the USPS. The mail, many rightly asserted, was more critical than ever with more people staying home. Will it be enough? Will it be used intelligently?
“The Postal Service remains concerned that this measure will be insufficient to enable the Postal Service to withstand the significant downturn in our business that could directly result from the pandemic,” a post office representative told Barron’s in an emailed statement this spring. “Under a worst-case scenario, such downturn could result in the Postal Service having insufficient liquidity to continue operations.”
For his part, Tree believes we are reaching the crisis point, one way or the other.
“The U.S. Postal Service seems to be headed for a crisis,” Tree writes. “The only question is whether that crisis will be brought to a political and/or pandemical head this year or whether it will be pushed out to some point in the future.”
Meanwhile, the publishing industry waits, wonders and does its best to comply with postal directives and requirements. And we’ll keep our eyes open, working with our mailing customers to manage all this as efficiently as possible.