Unable to Keep Borrowing
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For the first time in its history, the United States Post Office has hit its spending limit and is unable to borrow more funds from the Treasury Department. The spending limit, set at $15 billion, was reached late last month by the USPS and the agency has been using revenue only collected from stamps, shipping and its other services to operate since. Since June 30 the USPS has added $2.4 billion to its debt, after a devastating $5.2 billion loss in the same quarter.
The agency blames declining first-class mail, growing retiree obligations and requirements to continue Saturday delivery. Postmaster General Patrick Donahoe has urged Congress over the past year to give the agency the flexibility to close unused rural post offices and end Saturday delivery, but Congress has adjourned until after the election without having sent such a bill to the President. But, while these options would reduce costs and services, one is left to wonder how private carriers manage to stay in the black without loans from the Treasury.
In a recent blog post, Gretchen Hamel looks at the need for a update at the USPS and some common sense solutions to help decrease the common sense solutions to the growing crisis at the USPS.
What is the most startling example of waste and mismanagement at the USPS though, comes in the form of financial gimmicks to keep the agency from defaulting on its loans. According to the Wall Street Journal, past officials have admitted to managing the limit by timing expenses and skipping mandated payments for future retirees’ healthcare. Not only does this method kick the can down the road so to speak, it actively avoids what is a growing fiscal problem by endangering its own workers’ healthcare. When we mentioned earlier that the USPS had hit its $15 billion limit at Treasury that was solely for operating costs. The USPS has another account solely for it’s employees’ benefits and the agency recently defaulted on the $11.1 billion in retiree healthcare benefits in August and September.
Hopefully measures will be taken, both at the agency and in Congress to either reduce costs or make the agency profitable again, like it once was.