Another Fiscal Cliff: Postal Service Has Enough Money for Only 12 Months

It’s no secret that the United States Postal Service has fallen on hard times in recent decades as the world has changed and become more reliant on electronic communications. The USPS, unwilling to adequately change their business model to adapt is in dire fiscal straits as they are projected to run out of the money necessary to continue operations by this time next year.

The USPS incurred a deficit of $15.9 billion last year as it fell short on the required retiree health benefit payments and also fell drastically short on overall profitability. The retiree health benefit payments totaled $11.1 billion with the USPS defaulting on two consecutive months of multi-billion dollar payments. In August, the USPS defaulted on a $5.5 billion payment followed by a $5.6 billion default in September.

As lawmakers consider the looming fiscal cliff, it seems the USPS is nearing its own fiscal cliff as the Postal Service projects that they only have enough money to stay afloat for another 12 months. With higher-than-average election mail going out this year and the holiday season coming up, the USPS is doing alright for the very near future, but the failing service cannot count on any long-term fiscal solvency if drastic changes aren’t made.

At the forefront of this effort to get the USPS back into the black is Congressman Darrell Issa, who has proposed the Postal Reform Act to address the obsolete business model, out-of-control labor costs and excessive infrastructure.

The Act also aims to allow flexible delivery schedules, rework the compensation structure for postal workers to bring it in line with the private sector and assign a solvency authority to oversee the needed changes to policy. The solvency authority, according to Congressman Issa’s statement,

“…will have a broad mandate to restructure the Postal Service and reduce costs in order to bring the institution back to fiscal solvency when the Postal Service goes into default to the Federal government. The Authority will be disbanded once USPS meets several benchmarks that ensure financial health.”

While we contemplate what to do about the looming economic problem on the horizon, we should consider the ramifications of a mail stoppage for even a brief period of time. Businesses rely on the Postal Service for delivery, and we cannot afford to slow commerce down.

This problem is fixable. The problems of the Postal Service are remedied by tried-and-true business practices found in the private sector. Its business model is obsolete and there is redundant infrastructure that can be trimmed. That is the point behind the Postal Reform Act. We can save the Post Office and put it back on track, but it is going to require Congress to actually address the problem first and pass the Postal Reform Act.

Please demand that your government addresses this problem and ask your legislators to support the Postal Reform Act. A petition has been set up on TheTeaParty.net. When you sign the petition, you are doing more than affixing your name; letters are sent out to your senators and to your representative, urging them to support the Act and stand up for fiscal responsibility. Over 327,000 letters have been sent out so far!

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