Posted on 01/15/2013 6:30:51 PM PST by Steelfish
US Postal Service Faces Ruin Without Rescue From Congress, Watchdog Warns Inspector general David Williams says cash-strapped service, saddled with debt and low revenues, is in 'very serious trouble'
Heidi Moore 15 January 2013
The USPS lost over $16bn last year, and has lost about $41bn over the past five years, according to estimates. Photograph: Shannon Stapleton/Reuters
The 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.
(Excerpt) Read more at guardian.co.uk ...
Bullsh!t. Do the math: they lost billions, even if you factor out the pension payments.
The article says:
“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.”
Brilliantly run “company.” KILL IT.
I thought they were being crushed by a general lack of business, which cause the dwindling number of clients to pay more to make up for it. In my area they’re looking to consolidate, eliminating some tiny branches that really serve no purpose anymore. I don’t RECEIVE my bills online, and now more than ever I have days where I receive no mail at all.
Really? I could not disagree more!
Nowadays, most of what they deliver is spam.
Because of the income, congress will never put a stop to it.
I hate spam.
So, I’m fine with them going under.
how can a company allow itself to lose $16 billion in a year?....
they should have knocked off one day delivery, or went to more part timers, or raised their prices or gee, maybe just cut the salaries and pensions???
cut employees and cut hours....raise the prices but don't keep paying for employees that you can't afford, and don't raise prices just to pay your employees more...
stop the vicious circle...
time to let it die
Buy a bunch of Forever stamps before the prices rise on Jan 27.
usps can’t make it now, even when much of their long-haul mail delivery between hubs, is already handled by ups and fedex.
Yes, why pay attention to the retirement funding issue which was known to be creating a serious financial burden for USPS from the time it was implemented? No reason at all, judging from your cogent discussion of the facts.
I mean the USPS finance staff pale in comparison to your extensive expertise on the subject.
Postal volume fell off a cliff when the recession started and advertising mail came to a halt. But that is a cyclical issue and changes with the economy. The drop in first class mail is a result of the internet and that won’t return. That can only be addressed by consolidating services and reducing costs. But the internet also generates parcel business for the USPS so it’s not a total loss.
” In my area they’re looking to consolidate, eliminating some tiny branches that really serve no purpose anymore. “
People love their tiny branch offices. The USPS wants to close them far more than the locals want them closed.
“The USPS wants to close them far more than the locals want them closed.”
If the locals had to write monthly checks for the operation of the branches they’d rethink the matter.
Here in NJ our local property taxes are so high I’m surprised more people aren’t fiscal conservatives (though there are enough to ensure that Governor Christie, a hero to NJ taxpayers, should handily win re-election regardless of his opponent). I think the fact that we have a lot of welfare, illegal aliens, and tenants in general (who sometimes fail to see the link between property taxes and their monthly rent) makes fiscal responsibility a hard sell here (especially on the federal level); at the same time we have created an upper middle class composed of cops, teachers, firemen, and (though they are paid from a different source) postal workers. I think the postal workers do well because those that start right out of high school do well in a few years due to their work rules. For all of those workers, at 40 years old they make a lot of money while the people who pay them have been seeing real wages fall significantly.
I am so sick of my money paying for huge pensions. Make them worry about retirement like the rest of us.
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.