It is widely known that the United States Postal Service (USPS) isn’t necessarily on the best financial footing since prior to the Great Recession. In fact, things have gotten so bad for the Post Office that it made headlines late last year when it was reported it defaulted on $5.6 billion for future health benefits.
According to a new report (PDF) from the Government Accountability Office (GAO), the USPS faces $100 billion in both debt and unfunded benefits for its current and retired workforce ($85 billion in unfunded retiree-health, pension and workers’ compensation liabilities and $15 billion to the Treasury Department).
Congress has been lambasted for not taking swift legislative action to improve the finances of U.S. Mail. In addition, Patrick R. Donahoe, Postmaster General and CEO of the USPS, has openly stated that it can’t innovative without first seeking approval from Congress, which takes a lot of time and resources.
“USPS continues to be in a serious financial crisis, with insufficient revenue to cover its expenses and financial obligations, a continuing decline in profitable First-Class Mail volume, increasing unfunded benefit liabilities, and borrowing limitations due to having reached its $15 billion statutory debt [borrowing] limit,” said (PDF) Frank Todisco, a GAO chief actuary.
Attention to USPS’s unfunded benefit liabilities is important, as they represent scheduled future benefit payments to current and retired employees for which USPS has not set aside sufficient money to pay.
Over the past year, the USPS has taken a number of actions to reduce their liabilities and debt burdens, such as raising the price of stamps, shutting down more than 3,000 post offices and attempting to gain more customers by installing free tracking of packages and providing the option of receiving a signature upon delivery for critical mail items.
“Despite our efforts and our hard work, we cannot return the organization to profitability or secure our long term financial outlook without the passage of comprehensive reform legislation,” Jeffrey Williamson, United States Postal Service executive vice president, told (PDF) the House Oversight and Government Reform Committee recently.
David Williams, the chief postal watchdog, told the London Guardian (via the United Press International) that there is no other option but a bailout. He suggested that a $64 billion sum is a realistic amount in order for the USPS to meet its legal obligations.
This year, there have been some hints in Washington of either reforming or bailing out the mailing agency that can trace its roots back to the year 1775. A bill co-sponsored by Delaware Democratic Senator Tom Carper and Oklahoma Republican Senator Tom Coburn might provide the USPS with resources to allow it to address its fiduciary matters.
“Not only does our bill modernize the Postal Service and give it the tools and resources it needs to make tough but necessary business decisions to cut costs and increase revenue, but it also directly addresses the source of the Postal Service’s two biggest financial liabilities — retiree pension costs and health care costs – so taxpayers won’t be left on the hook for these obligations in the future,” Carper told Fox News.
As part of the proposed legislation, the USPS would change to a five-day mail delivery service in 2017, give the USPS the opportunity to recover overpayments into the federal pension system and allow it to operate processing facilities for two additional years.
Many in Congress feel it’s unlikely any legislation will be passed, especially in the middle of an election year. However, it’s either genuine reform or a bailout using taxpayers’ money.