Postal Service Posts $5 BILLION Loss

Posted by Adam English - Friday, August 10th, 2012

The U.S. Government is going to have to do something about to keep the U.S. Postal Service (USPS) alive within the next couple months.

But Congress has not bothered to act...

In the third quarter, ending in June, the company posted a loss of $5.2 billion, bringing its year-to-date losses to $11.6 billion so far. The third quarter 2012 losses were 70% higher than in the third quarter of 2011.

$3.1 billion of the losses are from a payment to the U.S. Treasury for future retirees’ health care. The USPS just missed a $5.5 billion payment and is already planning on skipping out on the $5.6 billion it owes later this year. The prepayments are unique to the USPS and must be put on the books even though they are not happening.

At the end of July, USPS was down to $2.5 billion in its $15 billion loan from the U.S. Treasury. Only $500 million in usable cash is on hand. By October, it could be $100 million in the hole.

Postmaster General Patrick Donahoe stated:

"We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability. We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers' changing needs."

His confidence is sorely misplaced. Congress ended its session without any meaningful action. The Senate created a bill, but members of Congress criticized it without any real debate or alternative proposals.

That is making the situation far worse. Here is Donahoe's statement on what has been done and what he needs to keep the USPS alive:

"We will do everything we need to do, but we can only go so far. Congress needs to act responsibly and move on this legislation. We've got a game plan for the next five years. We'll make that happen. We've cut our workforce by one-third. But we need freedom for delivery flexibility, we need to eliminate the retiree healthcare prefunding requirement, we need to get a refund our overpayment in the [Federal Employee Retirement System]. This needs to be done quickly so that our customers are confident in the long-term prospects of this Postal Service."

And confidence in any program hemorrhaging $5 billion a quarter seems awful hard to come by...