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Fact check: Rep. LaHood wrong in claim about USPS surplus - Chicago Sun-Times

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Twenty-six House Republicans joined Democrats last month in supporting legislation to send $25 billion to the U.S. Postal Service and to block any changes to postal operations until after the election.

The list included two of Illinois’ five GOP congressmen. U.S. Rep. Darin LaHood, however, was not one of them. Asked during a TV appearance to explain why he voted against the measure, LaHood questioned the need for that financial support.

“The post office right now, this year, is operating with about a $12 billion surplus,” he said on WTTW’s “Chicago Tonight” Aug. 24 broadcast. “The money isn’t necessary to get us through the election. That’s been a political football.”

His assertions come as the Trump administration is taking heat for removing hundreds of sorting machines and yanking mailboxes in the walk up to an election that will rely on the postal service more than any other election in the country’s history.

The postal service says it has “ample capacity” to handle an influx of mail-in ballots this fall. But the agency’s shaky financial footing is a well-known and longstanding problem: It hasn’t recorded a profit in any year since 2006 and saw a net loss of $2.2 billion in the most recent fiscal quarter. So, we decided to find out what LaHood was talking about when he said the agency was running a surplus.

“He was referring to the fact that the USPS had almost $13 billion cash on hand, as of June 30th,” LaHood spokesman John Rauber wrote in an email, echoing a point made in the White House’s statement of administration policy opposing the bill. That figure is backed up by the postal service’s latest quarterly report.

Cash on hand — or unrestricted cash, as the agency calls it — is not a surplus by any definition, according to experts. Instead, it refers to the amount of money the agency has in the bank at a given time. The postal service reports its net income — also known as a profit — or net loss at the end of each fiscal period, in accordance with accepted accounting standards.

Referring to cash on hand as a surplus “doesn’t make sense,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.

“The word ‘surplus’ suggests that the Postal Service’s revenues exceed its expenses,” he said. “They don’t. The Postal Service has been operating at a loss — certified by independent accountants and reported to the Securities and Exchange Commission — since 2007.”

Rep. Darin LaHood, R-Ill., at the Illinois State Fairgrounds in Springfield last year.
Rep. Darin LaHood, R-Ill., at the Illinois State Fairgrounds in Springfield last year.
Justin L. Fowler/The State Journal-Register via AP

In the last fiscal year, the agency brought in just over $71 billion in revenue. But it also shelled out nearly $80 billion to pay its carriers and cover expenses, including retiree benefits. A 2006 law made the agency responsible for prefunding future retiree health benefits, placing additional strain on its bottom line, which has also suffered over the years from declines in first-class and marketing mail. The postal service has run at a loss ever since.

“It’s not even breaking even on its annual expenses and its annual income,” said G. William Hoagland, a senior vice president at the Bipartisan Policy Center and former Republican staff director for the Senate Budget Committee. “I don’t know how anybody could say they have a surplus.”

Our ruling

LaHood said, “the post office right now, this year, is operating with about a $12 billion surplus.”

His spokesman told us he was referencing the nearly $13 billion “cash on hand” the agency reported at the end of June.

But cash on hand is not a surplus, experts said. The agency has reported a net loss in every year since 2007, the year after Congress required it to more robustly fund its retirement health benefit system.

We rate LaHood’s claim Pants on Fire!

PANTS ON FIRE – The statement is not accurate and makes a ridiculous claim.

Click here for more on the six PolitiFact ratings and how we select facts to check.

The Better Government Association runs PolitiFact Illinois, the local arm of the nationally renowned, Pulitzer Prize-winning fact-checking enterprise that rates the truthfulness of statements made by governmental leaders and politicians. BGA’s fact-checking service has teamed up weekly with the Sun-Times, in print and online. You can find all of the PolitiFact Illinois stories we’ve reported together here.

Sources

Chicago Tonight, WTTW, Aug. 24, 2020

“Postal Service says it has ‘ample capacity’ to handle election after Trump casts doubt,” CNN, Aug. 3, 2020

“The state of the U.S. Postal Service in 8 charts,” Pew Research, May 14, 2020

Press release, U.S. Postal Service, Aug. 7, 2020

Email, LaHood spokesperson John Rauber, Aug. 31, 2020

Statement of administration policy, Executive Office of the President, Aug. 21, 2020

Fiscal Year 2020 third quarter report, U.S. Postal Service

Email, USPS spokesperson David Coleman, Sept. 4, 2020

Phone interview and emails: David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, Sept. 3-4, 2020

Fiscal Year 2019 report, U.S. Postal Service

“Widespread Facebook post blames 2006 law for US Postal Service’s financial woes,” PolitiFact, April 15, 2020

Phone interview: G. William Hoagland, senior vice president at the Bipartisan Policy Center, Sept. 4, 2020

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