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Postal Service $1-Million-an-Hour Loss Puts Fiscal Abyss in View

Thursday, 09 August 2012 07:23 AM EDT

Just how long the U.S. Postal Service can survive without Congress passing a bill to let it make fundamental changes may become more clear today when the agency reports its 11th consecutive quarterly loss.

Management will update the board on when the service may temporarily run out of cash before rebounding during the Christmas holiday season. The service has said its cash would touch zero in October, a forecast that assumed it wouldn’t make $11.6 billion in required payments to the U.S. Treasury for future retirees’ health-care costs.

Senator Tom Carper, a Delaware Democrat who is a sponsor of the postal overhaul legislation the Senate passed in April, said he expects today’s results to show the service’s condition is worsening.

“It’s going to be kind of hand to mouth,” said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, whose members include heavy mailers such as Bank of America Corp. and EBay Inc. “Their cash is so low, their liquidity overall is so low, that they’re going to be depending on the cash flow coming in the door.”

Congress went on recess Aug. 3, two days after the Postal Service defaulted on a $5.5 billion health-care payment, without passing a bill to allow changes the service says it needs to survive.

The service, which gets no direct taxpayer funding, is trying to close thousands of post offices and mail processing plants and cut about 220,000 jobs, more than a third of its workforce. Many of those changes require Congress’s approval.

$9.1 Billion

The Postal Service has said it’s losing $25 million a day. It reported losing $6.5 billion in its first two quarters of the fiscal year ending Sept. 30, and has predicted a loss of $9.1 billion for the full year.

Carper urged the House, which isn’t in session until Sept. 10, to pass a postal bill that can be reconciled with the Senate version in time for President Barack Obama to sign a measure into law this year.

The House and Senate have 13 more legislative days together scheduled this year.

“The House’s refusal to act on postal reform legislation is fiscally irresponsible and is further eroding confidence in both the Postal Service and in Congress’s ability to provide it with the reforms it needs to save itself,” Carper said in an e- mailed statement.

“I can only hope that as members of Congress are back in their districts meeting with their constituents over the next month, they will hear these concerns about the future of the Postal Service and be persuaded that they cannot continue to postpone passing comprehensive postal reform legislation until it is politically convenient.”

‘Urgent Need’

The Postal Service wants Congress to act, David Partenheimer, a spokesman, said.

“There remains an urgent need for legislative action as part of our business plan to return to financial stability,” he said in an e-mail.

When Congress returns, it may also be asked to pass a drought-relief package for states in the U.S. Midwest and extend George W. Bush-era tax cuts and will have spending bills that need its attention.

“Timing for the consideration of postal-reform legislation has not been set,” said Ali Ahmad, a spokesman for the House Oversight and Government Reform Committee, which passed a postal measure sponsored by Republican Representatives Darrell Issa of California and Dennis Ross of Florida.

Limping Along

“Chairman Issa and House leadership continue to monitor the Postal Service’s efforts to implement all cost-cutting measures they are able to do under current law as well as the Postal Service’s financial condition to ensure that there is no disruption in service,” Ahmad said.

While the service is staring down a cash shortage, it took some pressure off Congress by saying it can limp along for now by withholding the Treasury payments, Sackler, of the mailers’ coalition, said in an interview.

“The conventional wisdom is that Congress will not abdicate its responsibilities and will make sure the Postal Service continues,” he said. “The worry is, continue in what way?”

© Copyright 2024 Bloomberg News. All rights reserved.

Thursday, 09 August 2012 07:23 AM
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