U.S. Post Office Says Winter Shutdown Possible

By Jon E. Dougherty at 5 Sep 2011

(Newsroom America) -- The U.S. Postal Service is so low on cash that its top official said without emergency funding from Congress it may have to shut down completely this winter.

"Our situation is extremely serious. If Congress doesn’t act, we will default," Patrick R. Donahoe, the postmaster general, told The New York Times.

At present, the post office is unable to make a $5.5 billion payment, the paper said, and Donahoe has been working to trim a $9.2 billion deficit looming large over the agency.

Some of those measures including stopping Saturday delivery, closing up to 3,700 post offices and laying off 120,000 workers - about one-fifth of the postal services' employees - though there is a no layoffs clause in the union's contract.

In an email world, the postal service has been losing revenue for years, but operating costs have also been climbing.

Labor represents 80 percent of the agency's operating costs, due in part from years of giving in to increasingly expensive union demands, like the no layoffs clause. That figure compares with 53 percent at United Parcel Service and 32 percent at FedEx, the postal service's two primary private sector competitors, the Times reported.

The paper said the Senate Homeland Security and Governmental Affairs Committee plans to hold a hearing on the agency’s predicament on Tuesday, but so far Democrats and Republicans have failed to agree on solutions.

Sen. Thomas Carper, D-Del., head of the Senate subcommittee overseing the Post Office, called the situation "dire."

"If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year. That’s not the kind of development we need to inject into a weak, uneven economic recovery," he said, according to the paper.

Missing the $5.5 billion payment due Sept. 30, which will be used to fund retirees’ future health care, won't immediately cause disaster. But if a longer-term solution isn't found regarding the agency's finances, by next year the postal service could run out of money to pay employees and fuel vehicles, among other operations, the paper said.

The Postal Serice handles about 3 billion pieces of mail per week. In all, the service will handle about 167 billion pieces of mail this year, or 22 percent less than five years ago.

© 2011 Newsroom America.

Contact Jon E. Dougherty

Newsroom America Twitter Feed

Categories:
Tags:

[D] [Digg] [FB] [R] [SU] [Tweet] [G]

NEWSMAIL