Postal Service Struggles to Stay Solvent, and Relevant (may shut down this winter)

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers, nearly one-fifth of the agency’s work force.

The post office’s problems stem from one hard reality: it is getting squeezed on both revenue and costs.

As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

They’re begging Congress to “stabilize their finances.” Becuase they’re billions in the red. Tell me that’s not asking for billions from the fedgov. They get government money every year.

Take some time to read around and it is possible to find out the truth. It will take some sifting through articles that are BS and poorly written, but it's possible. The USPS doesn't get money from the government every year. I'm not sure where you received this information, or if you are stating what you believe as if it is fact, but it's wrong. In spite of what many continue to believe tax dollars have not gone to the USPS since it was reorganized in the 70's. In fact, it is probably the opposite. Allow me to explain.

The USPS is required, based on Congressional order, to pay 5.5 billion per year into a retirees health care fund, and it has been doing this for quite a number of years; perhaps 10 or more. The amount paid in to date is well beyond the liability for USPS retirees. But here is the catch: it is not just USPS employees that pull from this fund. Other government agencies do also. Were it not for this budget line item the USPS would be close to breaking even, as it should.

The USPS has repeatedly asked Congress for this payment to be reduced and/or suspended, and for over payments to be refunded. Most recently Congress took the "bold" step of allowing the USPS to wait 3 months to make this years' payment. This changes nothing. In truth, what they did was postpone having to make a decision for 3 more months. What leadership!

I have speculated that Congress may continue to refuse to reduce the 5.5 billion and any refund of overpayment because it will force them to pay for retirees health care payments for all of the other government agencies that draw from that fund with tax dollars. To put it bluntly, Congress is placing the USPS in the red in order to not have to raise taxes or cut costs.

It is also congress that must provide permission for the USPS to go to 5 day delivery, and to close offices that, from a business prospective, have been a financial drain for years.

THAT is the relief that the USPS is asking from Congress. They are asking Congress to act responsibly, and to do it's job, and to remove constraints that prevent the USPS from doing what it should; what is has been working hard at doing for decades - operating like a business. It has done an excellent job, but there is much more to do - if Congress will just stop being a leech get out of the way.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.