USPS Says Multibillion Dollar Losses Preventable

It’s the end of another tough year for the U.S. Postal Service—the USPS recently reported a $5.1 billion loss for the end of the 2011 fiscal year. But officials with the nation’s postal carrier say it’s the additional $5.5 billion congressionally mandated bill that’s breaking the bank.

Earlier this year the USPS promised big cuts to address financial woes. The mail service slashed 34 million work hours despite an increase of more than 630,000 delivery points, and has also been rapidly downsizing—the agency slated nearly 3,700 nationwide branches for closure this September with plans for thousands more in the near future. But even with severe cutbacks, postal officials look to Congress to relieve the bulk of their financial burden.

“The Postal Service can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” said Postmaster General and USPS CEO Patrick Donahoe in a statement. “To return to profitability we must reduce our annual costs by $20 billion by the end of 2015. We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there.”

In 2006, Congress passed a law that saddled the nation’s mail carrier with an annual bill to pay for employee benefits several decades into the future. The Postal Accountability and Enhancement Act (PAEA) requires the USPS to pay for 75 years of anticipated health care costs of future retirees in just 10 years. This is in addition to the more than $42 billion the USPS has already paid toward future healthcare costs.

Given the current recession, and a 2 percent drop-off in mail volume since 2010, it’s clear that the post office has fallen on hard times. But USPS officials point to the PAEA as the No. 1 reason the agency is threatening to close thousands of offices, eliminate hundreds of mail processing facilities, end Saturday mail delivery, and lay off 120,000 workers. 

But some legislators insist that the solution for USPS solvency lies in further sacrifice. Last month, the House Committee on Oversight and Government Reform approved the Postal Reform Act of 2011, which aims to return the USPS to sustainability and profitability. The measure would appoint an independent commission to run the USPS, and promises to save several billion dollars in austerity measures.

According to Rep. Dennis A. Ross (R-Fla.), chairman of the Oversight subcommittee on postal reform, the USPS is at a crucial crossroads and must make hard decisions or risk collapse, taking 8 million American jobs with it.

“We can no longer afford to postpone the postal service’s day of reckoning by putting our collective heads in the sand and wishing the problem away,” said Rep. Ross in a statement. 

According to USPS Postmaster Mark Jamison, the Postal Reform Act aims to gut the postal service and break it into several pieces in a veiled scheme to pave the road to privatization.

Last week Jamison wrote an article detailing the “grossly distorted facts” regarding the agency’s crisis, and the “financial inconsistencies” he says the postal service is forced to endure.

“The postal service wallows in crisis today not because of the loss of mail volume but because of the provisions of the 2006 PAEA,” wrote Jamison. “The deficits incurred by the postal service over the last several years are virtually equal to the amounts withdrawn by the PAEA. That is a demonstrable fact. “

Postal officials are still hoping that they can appeal to lawmakers, but they don’t have much time. The 90-day extension to pay the annual $5.5 billion bill ends January 2012.