News Articles

These words have been used for months characterising the debt ceiling.

But there is another crisis brewing and you don't have to look farther than your mailbox. The U.S. Postal Service is in its own fiscal tight spot. In 2010, the U.S. Postal Service had an eight point five billion dollar deficit.

The Postal Service is expected to announce today the closing in upwards of 3,653 post offices. There are 32,000 post offices around the country and Postmaster General Patrick Donahoe recently spoke about closing a total of 16,000 post offices over the next 10 years.

But to no one's surprise, both sides of the aisle can't seem to agree on how to stamp out the fiscal hemorrhaging. I asked Senator Tom Carper (D-Delaware), member of the Finance Committee on his proposal to revamp the agency and if the future of the postman is in peril.

LL: The debt crisis facing the Post Office is nothing new. What kind of revamping would you like to see?

Sen. Carper: The U.S. Postal Service has been struggling in recent years due to the public’s rapid transition from traditional communications to electronic communications. The Great Recession of 2008 only accelerated that transition, bringing more pressure for the Postal Services’ finances. In order to survive in era when more people rely on email, Twitter, and Facebook to communicate, the Postal Service has to have the freedom and flexibility to make tough but necessary business decisions. Broadly, I would like to see Congress stop acting like a 535 member Board of Directors and get out of the way of the Postal Service pursuing innovative and cost-effective business solutions.

That’s why earlier this year I introduced comprehensive postal reform legislation, the Postal Operations Sustainment and Transformation (POST) Act of 2011.

The POST Act addresses the current budget issues plaguing the U.S. Postal Service in several ways including: restructuring postal pension and retiree health costs; addressing postal employee wages and benefits; allowing partnerships with state and local governments; continuing and enhancing efforts to preserve its existing business; and giving the Postal Service leeway to close some post offices and eliminate Saturday delivery.

LL: The Post Office cannot compete with UPS and FedEx as well as more consumers turning towards electronic billing and tax filing. What is needed to make the Post Office competitive again?

Sen. Carper: I think Congress needs to allow the Postal Service to continue to pursue innovative business proposals that will allow them to compete more effectively. For example, the Postal Service has had success recently with its flat-rate box promotion, which I’m certain is competitive with products offered by UPS and FedEx. The Postal Service also increasingly partners with formal rivals like UPS and FedEx to deliver those companies’ packages the so-called “last mile” to communities it wouldn’t be cost-effective for a private delivery force to go to every day. My bill would give the Postal Service greater authority to pursue these types of innovative ideas. I also think we need to encourage the Postal Service to pursue more “outside the box” thinking, such as setting up branches in retail spaces that are more convenient to customers, like a Walgreens or Target.

The Postal Service could also make more money by better utilizing its existing retail space to offer other local and state government services such as DMV services. Additionally, the Postal Service could turn what some might call its liabilities – like the fact that it has to deliver to every address in the country regardless of the cost – into moneymakers by taking better advantage of the tools and assets it has at its disposal.

LL: What is your message to Rep. Issa who opposes the part of your bill which would tap into surpluses and its retiree benefits funds?

Sen. Carper: I respectfully disagree with Congressman Issa’s conclusions about this aspect of my legislation. Four independent entities—the Postal Service’s Office of Inspector General, the Postal Regulatory Commission, and private accounting firms the Hay Group and the Segal Group – have all found that the Postal Service has overpaid between $50 billion and $75 billion into the Civil Service Retirement System (CSRS). The administration has also found that the Postal Service has paid some $7 billion more than it owes into the newer Federal Employees Retirement System (FERS).

My bill would allow the Postal Service to tap into this money that it has over paid and redirect it to meet the $5.5 billion it has to set aside annually to pre-pay the cost of its future retiree health care liabilities. This would help relieve a significant financial burden for the Postal Service and give it the breathing room it needs to get through this economic recovery and get on a sustainable financial path.

LL: How many years till the U.S. Postal Service is insolvent?

Sen. Carper: Unfortunately it’s really a matter of months instead of years. The Postmaster General testified before my subcommittee earlier this year that, without Congressional action, the Postal Service could suffer a serious cash crisis by the end of FY2011. If it’s able get past that hurdle, it would completely run out of cash and borrowing room by next August.

Last month we had our “canary in a coalmine” moment when the Postal Service decided to suspend its FERS payments in order to conserve cash. The Postal Service’s financial situation is very, very dire. Congress and the Administration need to work together quickly to give the Postal Service the freedom it needs to save itself. Right now, the Postal Service is essentially drowning and Congress’ inaction is forcing it to tread water with both hands tied behind its back.

Full story: