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Posted by on Sep 5, 2011 in Economy, Politics | 7 comments

Broke U.S. Postal Service Could Shut Down This Winter

If you hear a crunch it’s the sound of the U.S. Postal Service: it is now so broke that unless Congress enacts emergency legislation it could shut down this winter. When the slogan ““Neither snow, nor rain, nor heat, nor gloom of night…..will stay us from the swift completion of our appointed rounds” the list didn’t include email:

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.

Will this become a new venue for the politics of political hostage taking? Will some in Congress go after their least favorite programs (such as entitlements) before they’l agree to allocate the money? The thought does come to mind…MORE:

“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.

The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.

As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the agency’s predicament on Tuesday. So far, feuding Democrats and Republicans in Congress, still smarting from the brawl over the federal debt ceiling, have failed to agree on any solutions. It doesn’t help that many of the options for saving the postal service are politically unpalatable.

“The situation is dire,” said Thomas R. Carper, the Delaware Democrat who is chairman of the Senate subcommittee that oversees the postal service. “If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year. That’s not the kind of development we need to inject into a weak, uneven economic recovery.”

Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.

If you think a government shut down was unpopular years ago, just think of the reaction if people don’t get their mail…their checks…their business documents.

Is it time to restart mail delivered nationally by Pony Express?

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Copyright 2011 The Moderate Voice
  • DaGoat

    Unfortunately the Pony Express was a money-loser too.

  • Absalon


    Public employees are not real Americans or workers.

  • casualobserver

    It’s a ridiculous business proposition to have no layoff employees. if shutting down is the necessary event to get rid of that, it’s overdue.

  • jdledell

    Absalon -No worker in America is worth anything. Only financial capital is valuable. In fact lets lay off all the workers and do everything overseas. Or better yet, lets inport Chinese workers and have them deliver our mail. We would only have to pay them a buck an hour and pack’em in 20 to each bedroom.

    Hell, why should we even concern ourselves with people at all, they are just a drag on our economy and prevent the few from making even more money.

  • Shadow2424

    It a Amazes me how a few people can sit back and criticize the Post Office and the growth that it has helped in growing our country.
    The Post Office has become a casualty of the Internet just like Borders Books, Blockbuster and many other company’.
    No I don’t work for the Post Office or know anyone who does.
    The Post Office is something we should look at as a part of our history and help to preserve it.
    It’s time all of us get off our butts and push the chair away from the computer and start mailing some of our letters and bills and quit being so lazy

  • They started too late with the cost saving measures. They should have gone to five-day delivery five years ago, and moved to kiosk operations in grocery stores & shopping malls ten years ago.

  • Dave Hemmann

    It’s interesting that it’s the post office that is seen as the problem. As it shows below, congress has made made them pay 6.9 billion over normal retirement requirements.

    “The Postal Service will stop paying employer contributions to the defined-benefit Federal Employees Retirement System, which covers about 85 percent of career postal workers, it said today in an e-mailed statement. The $115 million payment, made every other week, will stop on June 24, the statement said.

    Suspending payments to the retirement account will help “conserve cash and preserve liquidity,” the statement said. The agency estimates it has overpaid by $6.9 billion and has asked Congress to pass legislation to return that money.”

    do the math
    115 million paid 26 weeks a year
    6.9 billion overpaid.
    i’d say they were good for a number of years.

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