Wednesday, September 7, 2011

Postal Service on Verge of Financial Collapse

Randolph E. Schmid

The U.S. Postal Service is on the verge of financial collapse and should eliminate Saturday delivery, close thousands of local post offices, restructure its health plan and lay off 120,000 workers to survive, according to Postmaster General Patrick Donahoe. Donahoe asked lawmakers to allow him to make “radical” changes to the centuries-old institution so it could avoid defaulting on its obligations. At a Senate hearing Tuesday, he said the Postal Service is all but certain to miss a $5.5 billion payment to its retiree health fund due at the end of the month. And that only begins the trouble, he said, warning that the postal system is heading toward a $10 billion net loss this fiscal year and is near its borrowing limit.

“I am at a loss for adjectives sufficient to the task of describing these actions by the Postal Service,” said Cliff Guffey, president of the American Postal Workers Union. “Several that come close are outrageous, illegal and despicable.” The postal service and the unions are pushing the administration to lessen the immediate crisis by giving the service between $50 and $75 billion they claim has been overpaid into federal retirement funds. The Obama administration has appeared reluctant to throw its support behind anything that could be labeled as another bailout. But Berry said Congress would have to act before his office would have the authority to return any money to the postal service that was allegedly overpaid to the retirement funds. Berry said Obama supports legislation that would defer the $5.5 billion payment for 90 days, giving Congress time to come up with other solutions. “That’s not going to be a slam dunk here in this Congress,” said Sen. Joe Lieberman, I-Conn., committee chairman. “And that’s not going to solve the problem for the long run.”

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