CAGW warns against replicating the same program with a different name

(Washington, D.C.) – Citizens Against Government Waste (CAGW) reacted skeptically to this week’s report that the U.S. Postal Service had scrapped its executive bonus program.

“Despite legendarily poor management, the Postal Service has long provided its supervisors and managers with a generous performance pay system, giving $164 million in bonuses to Post Office higher-ups last year, while simultaneously posting a deficit of $1.7 billion,” CAGW Vice President Leslie K. Paige said.  “These same executives just hiked the stamp price three cents in what will be a futile attempt to bail themselves out of the financial death spiral they are in.”

The bonus system has increasingly drawn criticism in recent years, most notably when a controversial adjustment to the formula removed profitability as one of the key criteria.  The Postal Service Office of Inspector General reported that the formula was inappropriate for use at the agency, as it resulted in an $805 million payout between 1996 and 2000, a period during which the USPS was posting higher and higher losses.  So Postmaster General John E. Potter abolished the program last Friday, lamenting that critics just “didn’t understand.” 

“On the contrary,” Paige replied, “people understood it too well.”

Until a new bonus system is in place, the USPS is proposing to increase merit pay by 4 to 6 percent in 2003. 

“The key to really reforming the postal service is not to replace one dysfunctional structure with another, but to usher in excellent performance in a market-competition model,” Paige continued.  “That means if productivity is not improving, costs are increasing, demand is declining, and waste is ubiquitous, you fire executives, not give them bonuses.  If someone doesn’t start holding the USPS management’s feet to that kind of fire, the agency will continue in its current abysmal financial state.  One way or another, eventually consumers must be freed of this bureaucratic monopoly.”

“Few non-bankrupt companies have as poor a record of cutting costs, enhancing productivity, and trimming unnecessary workers as the Post Office.  Its unsustainable business model invests in labor-saving equipment without saving any money on labor, which still eats up close to 80 percent of its budget,” Paige also said.  “It spends federal money on image advertising and promoting its notoriously feeble Priority Mail – yet instead of cutting costs and getting leaner, USPS increases rates.  Consumers shouldn’t be overly impressed with Mr. Potter’s elimination of executive bonuses.  There are many more demanding problems still to be addressed at the Postal Service.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.