Thursday, September 8, 2011

United States Postal Service On The Verge Of Collapse

GW Rastopsoff

According to Postmaster General Patrick Donahoe, as he spoke at a Senate hearing Tuesday, the U.S. Postal Service is on the verge of financial collapse and "Failure to act could be catastrophic." He asked lawmakers to allow him to make radical changes in order to stave off defaulting on the institution's obligations. Donahoe pointed out that the Postal Service was looking at a $10 billion loss this fiscal year and was very near its borrowing limit. He also made it known that the Service would most likely not be able to make a $5.5 billion payment to the retiree health fund due at the end of the month. The United States Postal Service has been declining for years. Last year they only delivered 171 billion pieces of mail; this is a drop of 20% from four years ago. Much of this decline is due to the advent of email use. Other factors include competitive delivery companies such as FedEx and UPS. The Postal Service is due an additional fall of 2% this year.

In a prepared statement, Tonda Rush, who is the director of public policy at the National Newspaper Association, said, "We are concerned that rural America is being thrown overboard by a postal system too eager to lavish its assets onto highly competitive urban areas. Within this context, the loss of Saturday residential delivery would be a major blow." The White House announced yesterday that Obama would propose a three month extension to pay the $5.5 billion that is due on September 30. The administration, however, did not endorse the payback of $50 billion said to have been overpaid into the federal pension plan. They did endorse the Postal Service's push to recover $7 billion that was overpaid to another pension fund.

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