After losing $41 billion over the last five years, the inspector general of the USPS has warned that America’s postal service will go out of business this year unless Congress acts to save it.
David Williams said the service is in “very serious trouble” after years of heavy debt and falling revenue.
Decisions made during the Bush administration required the service to pre-fund its workers’ retirement and health care benefits. It is the only federal agency that is required to do so, at a cost of roughly $5.5 billion a year. The USPS has paid in $330 billion for benefits, but the Office of Personnel Management recently told Williams that his agency would need $394 billion to meet the legal requirement.
Ruth Goldway, chairman of the U.S. Postal Regulatory Commission, says “The main reason for the dire financial state of the USPS is the debt it took on to meet its pension payments,” The Guardian reports. “They wouldn’t be in the situation they’re in without having borrowed all this money,” she said.
—Posted by Alexander Reed Kelly.
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.”
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.
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