USPS “on brink of insolvency”
USPS may run out of cash as early as October unless Congress drops a requirement to prefund health benefits for retirees, postmaster general John Potter told lawmakers, reports Business Week. The article continues:
Potter asked the House Oversight and Government Reform Committee to let the service cut Saturday delivery and stop paying health costs in advance. Dropping the funding requirement would allow the agency to be solvent when the next fiscal year begins 1 October, Potter said.
“Today we stand on the brink of financial insolvency,” Potter told committee members who expressed skepticism about endorsing his plan to reduce mail deliveries to five days from six. “If Congress is unable to act this fiscal year on broader legislation, our projections show that we will risk running out of cash the first month of fiscal year 2011.”
The Postal Service has said it may lose a cumulative $238bn by 2020 and last month proposed changes to trim the deficit. Some proposals, such as cutting a day of mail delivery, require congressional approval.
The Postal Service regulator, which enforces a so-called universal service requirement set by Congress, said the proposal to reduce service is “very troubling.”
“Its plan promises fewer employees to serve the public, fewer processing plans and post-operated retail facilities and reduced mail collection and fewer collection boxes,” Postal Regulatory Commission chairman Ruth Goldway said in testimony. “The plan’s proposals seem likely to spur further declines.”
The US Congress last year let the Postal Service postpone $4bnn in required payments to the retiree health benefit fund.
