US senators and unions are echoing the calls of US Postal Service executives in demanding actionfrom the House of Representatives to help reduce the agency’s massive financial losses.
USPS yesterday announced a mammoth $5.2 billion loss in its April – June 2012 third quarter,taking its nine-month loss to a staggering $11.6 billion, amid a cash shortage that has forced itto default on $11 billion of benefit payments, and warned its 2012 loss could hit $15 billion.About $3.1 billion of the Q3 loss was due to the controversial pre-funding of future retiree healthbenefits.
Postmaster General and CEO Patrick Donahoe said he was “confident” that Congress would “do itspart to help put the Postal Service on a path to financial stability”, above all with urgentlegislative changes to allow USPS to reform its health benefits payments scheme and to restructureoperations.
Senator Tom Carper, author of a postal reform bill that was approved in the Senate earlier thisyear, called on the House of Representatives, the lower house of the US Congress, to react quicklyto the Postal Service’s escalating losses after the current recess. So far pre-presidentialelection rivalry between Republicans and Democrats has blocked any postal reform.
“Clearly, the Postal Service’s financial crisis is growing worse, not better. I’m not sure howmuch more evidence leaders in the House of Representatives need before they realise that the PostalService is in dire straits and that the need for them to act on comprehensive postal reformlegislation is urgent. At a time when we’re fighting to create jobs and grow our economy, allowingthe Postal Service to go under is simply not an option,” he declared.
“The House’s refusal to act on postal reform legislation is fiscally irresponsible and isfurther eroding confidence in both the Postal Service and in Congress’ ability to provide it withthe reforms it needs to save itself. Simply put, time is running out for the U.S. Postal Service. Ican only hope that as Members of Congress are back in their districts meeting with theirconstituents over the next month they will hear these concerns about the future of the PostalService and be persuaded that they cannot continue to postpone passing comprehensive postal reformlegislation until it is politically convenient.”
Fredric Rolando, president of the National Association of Letter Carriers, representing some200,000 city-based postal delivery workers, pointed out that the health benefits funding accountedfor 80% of USPS’ $11.7 billion losses in the first nine months of the 2011-12 fiscal year. “Theirony of Congress continuing to insist on pre-funding is that the Postal Service already has $45billion in its future retiree health benefits fund, more than any company in America and enough fordecades into the future,” he declared.
“If Congress would step up and fix the pre-funding mess it created, then the Postal Servicecould focus on developing a business plan for the future that would meet the challenges of anevolving society while taking advantage of opportunities such as e-commerce. Degrading services anddismantling the universal network are not a business plan,” he added.
USPS yesterday called for Congress to make legislative changes in line with its Postal ServiceBusiness Plan, designed to save $22.5 billion by 2016. This would refund $11 billion of pensionplan overfunding, eliminate prefunding for retiree health benefits with the introduction of aseparate Postal health insurance programme and would give it more freedom to raise prices, cutSaturday mail deliveries and slow next-day mail deliveries by a day.
The Postal Service was forced to default on a $5.5 billion prefunding payment for retiree healthbenefits on August 1, due to insufficient cash resources. Without legislative changes, the PostalService will also default on a second similar payment of $5.6 billion due by September 30, 2012.Current projections show very low levels of cash, and no remaining borrowing capacity, at the endof the current fiscal year and through October 2012.
