The Postal Service Is Going Broke

It lost $3.8 billion last year, and its rate hike proposal was just denied

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Sagging under the weight of skyrocketing labor costs, the U.S. Postal Service is nearly out of cash. The agency posted a $3.8 billion loss last year and it has projected cumulative losses of $238 billion over the next decade. On Thursday, the independent panel that oversees the service denied a proposal to increase the cost of mailing a letter from 44 cents to 46 cents, dealing a further blow to an agency that has struggled to adapt in an increasingly paperless America. With the latest setback to restructuring, some pundits are suggesting radical ways to rethink the venerable service--including complete privatization.

  • Rate Hike Proposal Denied reports Natasha T. Metzler at the Associated Press: "In July, the Postal Service proposed raising first-class postage from 44 cents to 46 cents as part of a strategy for dealing with a worsening financial crisis. The Postal Service lost $3.8 billion last year, and the agency has been seeking other rate increases as well, including higher fees for periodicals, post cards and parcels." The decision by the independent panel that oversees the service was unanimous among the boards five members.

  • It's Teetering on the Edge writes Tom Shoop at Government Executive: "With Congress deciding not to provide $4 billion in cash relief to USPS in the stopgap funding measure that took shape Tuesday, the agency faces a tough decision: whether or not it can afford to make a $5.5 billion payment to prefund retiree health benefits on time. Either way, USPS could be looking at deep cuts in operational costs--including furloughs of postal workers that could affect mail delivery."

  • 'What if It Runs Out Of Money?' asks The Washington Post's Ed O'Keefe. What this will mean for citizens using Post Office services is that, "delayed mail deliveries if the Postal Service runs low on cash and has to furlough workers." Still, "There's no strong penalty against USPS if it's unable to make the $5.5 billion payment -- except embarrassment. Lawmakers would likely force Potter to Capitol Hill to explain why he couldn't make the payment and would likely order him to make drastic operational costs. Creditors and other contractors would get nervous and could stop doing business with USPS. Even if they don't pay the money, the organization is still operating with very little money in the bank."

  • Privatize It Already argues The New York Post's Abby Wisse Schachter. Congressional Republicans keep looking for a way to curb excessive government spending and one agency worthy of a "big cut" is the Postal Service: "The most recent audit of the USPS found all sorts of fun low-level corruption and inefficiency, including former postal employees who were hired back by the service to work as 'contractors' at a higher salary than they were paid as full-time employees. 'The Postal Service has awarded more than 2,700 contracts to former employees since 1991 and awarded 17 no-bid deals to former executives between 2006 and 2009,' according to one of the audits."

  • The 'Most Inefficient Monopoly in America' concludes The Wall Street Journal's Editorial Board. The average postman makes $83,000 in wages and benefits, nearly double the amount of what an average private sector employee makes. For the postal workers union to be asking for even more benefits and better benefits while the service loses $16 billion dollars a year in revenues is unacceptable. The Journal's solution: "The time has come to free the mail by amending the private express statutes—which confer a legal monopoly on first-class mail—and allow expanded choices for letter delivery. Yes, we know the ritual claim is that this will end universal delivery, but even people living in remote areas would benefit from an injection of competition into the antiquated mail system."

This article is from the archive of our partner The Wire.