Default on Postal Service fund payment expected
The United States Postal Service continues to be wracked by financial woes, as the agency is constantly short on funds. The Postal Service fund payment, a $5.5 billion deposit, is going to be defaulted on and the agency is scheduled to run completely out of funds later this year.
Postal Service fund payment to default
Since last year, the United States Postal Service was given an extension on its annual retiree health fund payment, a $5.5 billion deposit into an account covering health care for retired workers. The payment, according to CNN, is due on Wednesday, August 1, and the agency is going to default unless saved by a miracle. Congress, according to Reuters, isn’t having it, either.
That annual payment is crippling the agency. Passed by Congress more than a decade ago, the annual payment into the retired worker health fund is thought to be the biggest obstacle to the fiscal health of the USPS. The payment in question was originally supposed to be made in September of last year, but has been extended since then so the agency can right itself to some degree. Progress has been slow, however.
Could run dry of all funds
The next Postal Service fund payment, according to CNN, is due Sept. 30, the beginning of Fiscal Year 2013. The Postal Service estimates that it will likely default on that $5.6 billion payment as well. Not only that, but continually-declining mail volumes also are contributing to the possibility of the USPS running out of money completely, which the agency projects could happen by October, as current estimates that the agency could run into a $110 million shortfall by Oct. 15, 2012.
The agency has been in a perpetual state of crisis for some time. After posting huge losses for the past few years running, it is projected to run a deficit of $14.1 billion for this year, according to NBC News. First-class mail volume, the class of mail that one gets in their mailbox, has been steadily declining by 4 to 5 percent per year for some time. The agency is losing $25 million per day, according to Businessweek, partially due to both the decline of mail volume and other factors.
The possible end of the mail
A national postal service has been extant in some form since the 18th century. The modern system is in crisis, but there are some steps that have been taken to ameliorate the situation. The agency has been authorized to reduce its employment rolls by 100,000, Saturday deliveries are likely to cease and the agency is consolidating some of its locations to hopefully save money. However, according to NBC News, savings from some of these measures aren’t likely to kick in until 2014.
Some bills are currently pending before Congress to authorize further cuts and render some financial assistance in the form of loans, but according to ABC, lawmakers are disagreeing on party lines on how best to keep the postal service afloat.