USPS facing “most serious threat in its 200-year history”

Congress looking for urgent cuts after USPS posts record losses for 2010 Senior Congressmen on both sides of the political divide have said the latest financial results from the US Postal Service underline the need for “comprehensive” reform.

The USPS unveiled its figures for the fiscal year ending September 30, 2010 on Friday, posting an $8.5 billion loss for the 12 months.

More than doubling the $3.6 billion losses seen in its 2009 fiscal year, the USPS said the 6.6% decline in First Class mail had hit particularly hard, since the service accounts for almost half of the organization’s $67.1 billion annual revenue.

Despite the USPS achieving $9 billion in cost savings in the past two years, the latest loss was taken by Congress as justifying proposals for wider cuts to USPS services.

Senator Tom Carper, the Democrat currently steering a postal reform bill through the Senate, said the extent of the latest losses had not been surprising given that the financial challenges facing the USPS.

He suggested the “Great Recession” coupled with “systemic flaws” in the USPS business model represented “the most serious threat to the institution in its over 200 year history”.

Noting recent concerns that the USPS was currently on track to run out of money by this time next year, the Senator from Delaware said reforms should be undertaken quickly.

Sen. Carper said: This report underscores the urgent need for Congress to move swiftly to consider comprehensive Postal reform legislation, which I introduced in September of this year, in order to avert a catastrophe for the Postal Service.

“I hope my colleagues and the Administration will take this report to heart and work with me to address the challenges facing the Postal Service so we can protect the vital services American families and businesses depend on,” he added.
Having taken a majority in the House of Representatives, the Republicans also look set to support cuts at the Postal Service.

Congressman Darrell Issa, who is widely tipped to head up the Oversight and Government Reform Committee when the new Congress returns in January, mirrored Senator Carper’s calls for urgent cuts to the USPS.

However, if the five-term congressman from San Diego has his way, one of the major reforms proposed by Senator Carper’s POST Act would not be enacted.

In the weeks leading up to this month’s elections, Congressman Issa angered many in the USPS by describing proposals to amend the controversial manner in which the USPS is obliged to pre-fund staff pension and healthcare liabilities as a “bailout”.

Commenting after Friday’s financial results statement, Congressman Issa suggested cuts would have to be made in the USPS without resorting to changes to the pre-funding mechanism, which have been predicted to save the Postal Service between $5.5bn and $5.9bn a year.

He said: “This loss only underscores the urgent need for the Postal Service to trim its operating costs to match revenues. Congress has an obligation to ensure that effective solutions are implemented and taxpayers don’t get stuck paying for a bailout.”

Last week, the bipartisan National Commission on Fiscal Responsibility and Reform set out its recommendations for the entire federal system, which is set to see a three-year pay freeze for federal workers.