US Postal Service running out of cash
A top official says the USPS is in a financial disaster, and may need another rate hike to operations going.
By Paul Ausick, 24/7 Wall St.
The U.S. Postal Service is dangerously close to running out of cash. In testimony on Thursday before the Senate Committee on Homeland Security and Governmental Affairs, Postmaster General Patrick Donahoe made the USPS’s position crystal clear.
At the end of June the Postal Service had total assets of $22.5 billion and total liabilities of $61.2 billion. Of those assets only $3.1 billion is available in cash. The USPS has borrowed its mandated limit of $15 billion, and currently has enough cash on hand to fund operations for just 11 days.
The USPS will fail to make its $5.6 billion payment to its retirees’ health fund on Sept. 30th, and will add that total to the $11.1 billion it failed to pay last year. If it makes its scheduled $1.4 billion workers’ compensation payment next month, its cash balance will total just five days of operating expenses.
Donahoe noted that is a "razor thin margin," considering that private sector companies typically have enough cash on hand to fund at least two months of operations.
For the first nine months of 2013 the USPS posted a net loss of $3.9 billion. In fiscal year 2012 the net loss totaled $15.9 billion -- in addition to the missed $11.1 billion payment for retiree health benefits.
The Postal Service’s biggest problem, though Donahoe doesn’t say it directly, is the Congressionally-mandated pre-funding payments to the retirees’ health benefit fund. The USPS has run a deficit of $41 billion in the six years since the pre-funding requirement was passed. Of that total, $32 billion has gone to the pre-funding payments.
"To be clear," Donahoe said, "the Postal Service does not have the authority or the tools to managed these massive obligations without comprehensive postal reform legislation."
Congress either has not acted on or rejected proposals to eliminate Saturday mail delivery, raise postal rates and close some rural post offices. Eliminating the pre-funding requirement would help ease the cash crunch substantially, but that is not likely to happen. More likely are added calls to privatize the U.S. Postal Service -- as the U.K. is about to do.
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Whatever happened to eliminating Saturday delivery? Wouldn't it be better that a few people lose their jobs than all of them?
Fiscal irresponsibility is our #1 problem as a nation and we need to stick people in charge who are willing to implement whatever changes are necessary to balance budgets and pay down the debt. I'm even willing to consider tax increases and postage rate hikes, AFTER the budget is balanced, AFTER we have a rainy day fund set up equal to 5% of the previous year's expenditures, and AFTER you can prove that the additional proceeds will be used to pay down the debt. Until then, get your priorities straightened out and start making cuts.
Let the Post Office have true freedom to have unfettered negotiations between management and a workforce that is allowed to strike. And let the free market rip.
Run the USPS like a business, instead of a Government institution...Problem solved.
First eliminate Saturday deliveries..
Second eliminate 10% of workforce period.
Third eliminate 25% of management, make workers more responsible.
Do you people understand that the government requires that the postal service PRE-fund retirements for people WHO ARE NOT EVEN BORN YET?!?!!?!?!
They are prefunding retirements, 75 years in advance!
SEVENTY-FIVE YEARS! NO ONE ELSE DOES THAT! No other government agency is required to do that, the private sector does not do that, so why this stupid pre-funding requirement? It allows the Fed to look like it 'saved' money.
Seriously this is a problem brought on by craptastic governmental accounting requirements, and as mentioned before, I would not be surprised if there's a government official or two getting bribed to ensure the postal service fails so that the money making portions of the business can be sold to UPS/FEDEX at pennies on the dollar.
Too bad our news services no longer function as an independent body, I bet a semi-decent reporter could 'follow the money' and break one hell of a conspiracy/corruption story on this.
As long as congress is allowed to divert revenues from the USPS the situation will continue to deteriorate. If the USPS doubled rates congress would use past excuses to divert revenues even less private mail would be carried and junk mail and political campaign materials would account for an ever increasing percentage of mail carried.
Why are the members of congress so willing to waste money on programs like the over-budget F-35 that is still under development sixteen years after the contract was awarded with a per-unit price that has nearly tripled and willing to allow corporations like GE and Apple avoid taxes but so obsessed with crippling the postal service?
They push to privatize social security, medicare, and the postal service. Corporations are profit driven, and time after time have shown they are willing to sacrifice service and demand more work for less pay and benefits from their employees. Competition with the USPS is helping keep the prices of the other services down and without it the prices of UPS and FedEx would increase rapidly driven by the demand for profit.
IT was a DEMOCRAT controlled House and Senate that passed this legislation to payoff its union pals. Screw the average American, so long as they protect their buddies.
No matter which way you look at it, the LEFT is the EXTREMIST PARTY.
The slackers are Obozo and the Pukes in Congress.
Let's all hop in the Limo and take another grand vacation!
Get rid of the employee dead wood, I consistently get someone else's mail.
Pay the employees what they are worth not what they demand. Get rid of the union.
Close little used post offices.
Let each carrier have two routes. Deliver one route one day and the other the next. Need 50% less carriers and half of the deliver vehicles.
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