Saturday, April 09, 2011

Taxpayer Alert: The Coming Postal Service Bailout

Experts are warning that the postal service could reach its debt ceiling as early as September, which could push Congress to provide the federal agency with a cash bailout.

MSN reports:

    Facing a projected $6.4 billion loss this year, on top of a record shortfall in fiscal 2010, the Postal Service is expected to slam into the $15 billion statutory debt limit established by Congress by the end of the current fiscal year on Sept. 30. At that point, it could be faced with the choice of running out of cash or defaulting on its sizable pension obligations, including a required $5.5 billion annual payment to fund future retiree health costs. This has intensified efforts on Capitol Hill to scrutinize Postal Service management practices, as well as to find ways to provide potential short- and long-term relief to the beleaguered agency.

    House Oversight and Government Reform Committee Chairman Darrell Issa, R-CA, convened a hearing this week to take aim at the Postal Service’s recent deal with the American Postal Workers Union, representing more than one-third of the agency’s 572,000 person work force. The deal, which still requires ratification by the union’s membership, calls for a two-year pay freeze followed by a 3.5 percent wage increase over three years. "Eighty percent of the Postal Service's operating expenses are workforce-related. Costs must be reduced to align them with falling mail volume and declining revenue projections,” Issa declared.

    But others suggest the major culprit is not current Postal Service management -- which has reduced the size of the agency by 100,000 employees in the past two years -- but rather Congress itself. While demanding that the Postal Service find ways to achieve economic self-sufficiency, members of Congress often have hamstrung the Postal Service with a series of restrictions aimed at averting blowback from their political constituencies.

    As the Postal Service adjusts to email, electronic bill paying and faxes replacing so-called snail mail, "it would be irresponsible for Congress, as it does now, to stand in the way and act like a 535-member board of directors," Sen. Thomas Carper, D-Del., said recently. "No real business could ever function under that type of governance and it's unrealistic to think that the Postal Service would be well served by that type of micromanagement."

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