They’ve got until October, then the US Postal service expects to run out of money. This video shows Congress trying to find out “Where have all the letters gone?”
Yes, they have problems paying their bills and yes, those are largely about pensions and retirees, but the reason they can’t pay them includes the obvious one. The Internet. It’s easy to be dismissive about the decline of something which is being displaced by innovation, but the number of jobs affected is in the millions (the USPS itself employs over half a million) and the impact of that upon innovation is a key issue.
They’re discussing a situation which was outlined in a May 17, 2011 US Postal Service press release, so we’ve provided an extract below:
Postal Service Faces Financial Shortfall Unless Congress Addresses Mandates
The postmaster general told a Senate subcommittee today that despite significant cost cutting and revenue generation, the Postal Service finds itself in dire financial straits. Statutorily mandated payments due to the government at the end of September will not be paid, he said, unless Congress acts to refund overpayments of pension funding or ease the mandate to prefund retiree health benefits.
Postmaster General Patrick R. Donahoe said that the financial condition of the Postal Service is such that in the absence of comprehensive legislation, there are required federal payments that are now in jeopardy. “As things stand, we do not have the cash to make a $5.5 billion prepayment for future retiree health benefits due Sept. 30,” he said
“Despite our significant role in the American economy and our aggressive cost cutting and revenue generating efforts, I regret to say we are in a serious financial predicament today,” he said.
For three years, the Postal Service has been asking the Congress to alter the payment schedule of a mandate in a 2006 law that, unlike any other federal agency, requires the Postal Service to prefund retiree health benefits in amounts approximating $5.5 billion. In addition, the Postal Service has asked to gain access to $50 to $75 billion in overpayments it has made to the Civil Service Retirement System (CSRS) and a $6.9 billion it has overpaid to the Federal Employees Retirement System (FERS).
Since inception in 2006, the Postal Service has paid some $20.9 billion into the Retiree Health Benefit Trust Fund. Under current law, the Postal Service is scheduled to continue to make $5.5 to $5.8 billion in payments up to and including 2016.
With the right legislation, however, Donahoe told the subcommittee, the Postal Service can return to profitability and if given flexibility, “the Postal Service can continue to serve the American public very effectively and continue to sustain and propel American commerce.”
The subcommittee chairman, Sen. Tom Carper (D-DE), introduced legislation today that addresses the financial issues confronting the Postal Service and, among other things, allows a transition to a five-day delivery schedule, a move that could effect an annual saving of $3.1 billion.
In asking for urgent consideration of legislative action, Donahoe said that although the agency’s financial condition is dire, the Postal Service is nonetheless a strong and a vital part of the economy but the continued burden of the retiree health benefit prefunding “continues to have a negative impact on our business.”
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.