The Postal Service lost $2.8 billion in fiscal year (FY) 2008. This year, the Postal Service is concerned its loss could grow to $6 billion or more. Since the Postal Service is limited by law from borrowing more than $3 billion per year and the Postal Service started 2009 with only $1.4 billion cash on hand, there is a danger the Postal Service could face a liquidity problem as payroll and benefits alone are about $54 billion a year.
Last Wednesday, Postmaster General Potter testified to the Senate subcommittee that oversees the Postal Service. (Click here to view that testimony.) The Postmaster General asked for two forms of relief:
- Moderation of payments for retiree health care — Under the Postal Accountability and Enhancement Act (PAEA), the Postal Service must make annual payments (more than $5 billion each year) for the next 8 years into a special fund for future retiree health care benefits. In addition, the Postal Service must pay separately for current retirees. The Postal Service requested the ability to start paying for current retirees out of the retiree health care fund now rather than in 8 years as called for in the PAEA. The large annual payments into the fund would continue.
- Optional 5-day delivery — The Postal Service would like the Board of Governors to have the option of reducing delivery from 6 days a week when circumstances warranted.
What do you think of these options?