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Moore reports: "Inspector general David Williams says cash-strapped service, saddled with debt and low revenues, is in 'very serious trouble.' The USPS lost over $16bn last year, and has lost about $41bn over the past five years."

Many rural post offices have been forced to close. (photo: Fiscal Times)
Many rural post offices have been forced to close. (photo: Fiscal Times)


US Postal Service Faces Ruin Without Rescue from Congress

By Heidi Moore, Guardian UK

16 January 13

 

Inspector general David Williams says cash-strapped service, saddled with debt and low revenues, is in 'very serious trouble'.

he chief postal watchdog has warned that the troubled US Postal Service will go out of business this year unless Congress acts to rescue it.

David Williams, the inspector general of the USPS, says the service is in "very serious trouble", after five years lumbered with heavy debt and falling revenues.

In an interview with the Guardian, Williams warns that Congress, which has been distracted by November's elections and the fiscal cliff crisis, must act this year to save the service.

The USPS lost over $16bn last year, and has lost about $41bn over the past five years, according to Robert Taub, a vice-chairman of the Postal Regulatory Commission.

Since 2006, the postal service has been required - unlike any federal agency - to pre-fund its retirement and healthcare benefits to workers. This costs it about $5.5bn a year. Currently, the post office has paid in $330bn for benefits, but the Office of Personnel Management recently told Williams that it will need $394bn to satisfy the legal requirement.

At the same time, it has been unable to raise postal rates enough, because they are pegged to inflation, and inflation is low. (A long-awaited rise is coming on January 27, moving postal rates up by 2.75%).

The economic downturn in 2007 hit the postal service hard, as people sent less mail; it has also seen a steep decline in its most profitable product, first-class mail.

Richard Geddes, an assistant policy professor at Cornell and an American Enterprise Institute scholar who has studied the postal service, says first class mail has fallen from 103bn pieces in 2000 to just around 74bn pieces in 2011.

Even though it has shrunk from nearly 900,000 thousand employees in 1998 to about 530,000 now, many regulators and lawmakers see the US Postal Service's infrastructure as inefficient, and have talked about areas they would like to cut - the number of facilities that the USPS uses to process mail, for instance.

Williams, whose organisation audits the USPS, described the set of financial constraints on the service as "murder - it wasn't premeditated, but it was murder."

The postal service has reached its $15bn credit limit with the US Treasury, and has in effect run out of money."This is the year that they borrowed so much that they can't borrow any more," Williams said.

Asked whether the USPS will need a bailout this year, Williams replied: "Yes. The choices are that it would cease to exist or it would need a bailout." Williams said he did not expect the USPS to require taxpayer dollars, but instead that it would require congressional intervention, perhaps to reduce the pension payments.

The US Postal Service, which missed its last two payments into the benefit funds, has never made a single payment without having to borrow from the US Treasury. Ruth Goldway, chairman of the Postal Regulatory Commission, notes the irony: the USPS pension payment goes to the US Treasury, so for the past five years it has been borrowing from the Treasury to pay the Treasury.

There are many possible solutions to the problem, but, as a start, Williams, Goldway and Taub believe that the pension payments should be reduced. "I favor a post office that is not burdened by this unrealistic pension obligation," Goldway said.

Goldway says the main reason for the dire financial state of the USPS is the debt it took on to meet its pension payments. "They wouldn't be in the situation they're in without having borrowed all this money," she said.

California congressman Darrell Issa, a Republican who has taken the lead on postal service reform along with congressman Dennis Ross, suggested last year that USPS employees should be required to pay into their health and life insurance benefits, like all federal workers.

Another school of thought holds that the postal service could shrink further, cutting staff and facilities. Williams suggests that if the post office took steps to reduce its size that it could save $12bn a year: "Which is more than enough to get them out of the trouble they're in."


 

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+21 # MidwestTom 2013-01-16 08:30
Unlike other government activities, Congress years ago made the Postal Service not only cover their pension costs, but catch up on past deficits in their pension fund to the tune of $7 billion per year. That is why they are going broke.
 
 
+16 # Glen 2013-01-16 09:11
The deficits include paying for employees that have yet to be hired. Taking such huge sums is part of how the government funds itself AND the military.
 
 
-10 # Surflar 2013-01-16 17:07
I've heard that before but it's rarely mentioned can't wait till Obummer care kicks in.
 
 
+32 # guyachs 2013-01-16 08:35
THere's an effort to kill the postal service or at least reduce it greatly so they profitable parts can all be turned over to private enterprise. The other parts will either be killed or greatly reduced.
 
 
+27 # Manacha 2013-01-16 09:06
Please, please, let's do something to save Post Offices. They are the bloodline of small communities.
 
 
+15 # shawnsargent2000 2013-01-16 12:07
I don't know where it is written in Constitution, but it is written somewhere, that the U.S. Post Office is an essential part of our Government.
Additionally, throughout history, there have been calls to privatize the postal service, and in the past they have been denied. It is up to the People to Speak out and Demand that the Constitution be honored and for the Government to stop claiming that it can be closed.
 
 
+22 # Glen 2013-01-16 09:08
guyachs, you are correct to include "private enterprise" in your comments.

Congress and the president are highly unlikely to give back what they have already taken. They have sucked the postal service almost dry in addition to blaming it on the postal service. I have an old friend who is a postmaster locally who keeps up on ALL THINGS political and postal. The shame of the government is in destroying all decent programs and blaming scapegoats. Then there is the military...
 
 
+8 # Lowflyin Lolana 2013-01-16 17:12
Does your postmaster friend have a blog or website?

I used the USPS when I did ebay sales and they were excellent.
What they are doing to the USPS *is* murder. It's shameful and unAmerican. And the way they twist the issue around to make it look as if the USPS is to blame------ther e need to be good pr people on this or they are sunk. They may be sunk anyway. I'd like to hear anything your friend has to say.
 
 
+26 # SharonToji 2013-01-16 09:17
Even though our company is small and can't help out much, we have transferred almost all our mailing over to the US Postal Service and are happy with what we find. The new "If it fits, it ships" boxes and envelopes are great, and save us from purchasing huge quantities of boxes which then we often don't need. We can do everything on line, and drop things off in seconds, or the postal service will pick them up. We are saving money -- not much -- and helping out the postal service, which we cannot allow to die.
 
 
+22 # Regina 2013-01-16 09:21
I wonder what Issa's real stake in this trashing campaign is -- stock in UPS? If our postal service actually fails, we'll be the biggest joke on the planet.
 
 
+10 # Lowflyin Lolana 2013-01-16 17:13
Check his contributors. FedEx, UPS.
 
 
+24 # giraffee2012 2013-01-16 09:54
Congress (the purse of our government) is tackling the USPS to give big business more $$ --

But those who will be crushed are the small businesses who rely on USPS and cannot afford FedEx, UPS, etc. and others waiting to make a profit.

This crippling of the USPS is a clear example that $$ rules our government.

My grandkids send to me via USPS letters all the time - Are they supposed to send a 47 cent envelope through FedEx for several dollars? Oh, I'm off tract - I'm not a small business!
 
 
+28 # jwb110 2013-01-16 10:02
The Postal Service is in trouble because the same Congress who won't help them passed a law that required the Postal service to fund its pension fund to 75 years in the future. This is a push for privatization that will seriously cut into a private citizen's right to have his mail not tampered with.
 
 
+17 # Rich Austin 2013-01-16 10:14
A neoliberal (aka, neoconservative ) Congress passed legislation requiring the P.O. to fund benefits far, far, far into the future. The legislation is purposely untenable. The ultimate goal of the neos is to privatize our P.O., including the unloading of buildings and equiipment at cents on the dollar. When that happens you can forget first class mail for under a buck.

We make make Congress undo its mess.

Will we?
 
 
+11 # grouchy 2013-01-16 10:15
Isn't this a service that we, as citizens of this country, truly deserve--over all the $ wasted on military gross overspending? The scam pulled for years against the postal system has not been pointed out to any degree which would more likely cause a mass protest to our politicos! If we loose the service or even part of it, isn't it our own fault?
 
 
+18 # Sense 2013-01-16 11:38
Another fundamental problem in responding to the financial situation at the USPS is considering it as a "business". It is a constitutionall y mandated SERVICE. Why does it have to balance its books as a business? Why do we even talk of "losses"? We do not ask the Food and Drug Administration to operate as a business. We do not ask it of the National Park Service, or Department of Agriculture, or the rest of the federal government. Those who continue to criticize the USPS for losing money want to privatize it so some corporation owners can make money off the public, with no public control..
 
 
+7 # Lowflyin Lolana 2013-01-16 17:31
Exactly. The mission statement is different. A government service is there to SERVE the people. A corporation is there to profit.
The USPS would not be losing ANY money if it did not have to finance pensions 75 years in advance--someth ing no other organization has to do. Congress voted to murder the USPS with that requirement. I would suggest contacting every single rep who voted for this outrage, and let them know how you feel.
I would suggest contacting them via "snail mail."
 
 
+4 # MainStreetMentor 2013-01-16 12:45
If this situation is to be "fixed" then ONE suggestion is: Remove the current semi-privatized management/exec utive team(s); Outlaw any "bonus" program as any part of any compensation package; Return the entire operation BACK to total federal control as it used to be; Void all current laws currently governing the operational/fun ding aspects of the United States Mail (i.e., USPS).
 
 
+10 # inpectore 2013-01-16 13:56
MainStreetMento r is right. Do away with the Board of Governors set up in 1971, and return the Postmaster to a cabinet level position. Repeal the Postal Accountabilty and Enhancement Act passed by Congress and Bush in 2006. The USPS is not broke, operates at a profit and has not taken govenment money since 1971. Get rid of the crazy requirement that the USPS must by 2016 fund pensions for employees who haven't been born yet. That is part of the right wing drive to give the USPS away to corporations.
 
 
+6 # Street Level 2013-01-16 21:02
The USPS is the nations largest civilian employer and this is about Union Busting at the hands of Issa the Thug.
Fed Ex and UPS was probably too expensive and couldn't be leaned on by the Super Pacs who sent their tons junk mail this past election.
It's cheap, it's efficient, it's Union. Three reasons too tempting for the greedy.
 
 
+4 # giraffee2012 2013-01-17 12:26
The Issa's, Koch, etc want to take us back to merry ole England in the 1700-1800 where there were the Rothchilds (or whoever had all the money) and the slum-dogs who ate gruel and worked from childhood until death. Congress (i.e. the drama queens) are funded by the monied and like their perks so they pass insane laws to break our democracy.

Without a middle class = we have no democracy. Unions were (maybe still are) the reason USA has a middle class.

We need a revolution to break free of the monied ruling - oh yeah - I remember now: The U. S. Supreme Court said "money can buy our government" - be that money foreign of domestic when they allowed the Koch Brothers to prevail in Citizens United in 2010.

Time for the RATS to GOOOOOOOOOOOOOO - that's Scalia first! He's as bad a Cheney - bragging about his power and using that power for evil!
 

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