U.S. Postal Service could close this winter

Posted Sep 6, 2011 by Nancy Houser
The United States Postal Service, facing massive budget problems, may soon close its doors. The only solution is if the parties can miraculously reach a compromise for a bailout.
A USPS mail carrier in Detroit  Michigan
A USPS mail carrier in Detroit, Michigan
The U.S. Postal Service will soon be facing a deficit of $9.2 billion this fiscal year that has been said to be a possible shutdown of 3,600 offices, reported in an article written by Laurie Segali in Money. However, the deficit is combined with other issues...such as a union which has been preventing the post office from laying off workers in order to control the debt, and a lack of political bipartisanship to assist the struggling federal giant from going under.
According to Business Insider, the only answer for the country’s “neither rain, nor snow, nor sleet….” from going under is a bailout from Congress in the next couple of months. Without it, over 574,000 Americans who work for the U.S. Postal Service will be unemployed before Christmas---a decision that lies on the back of both parties in Congress.
According to Donahoe, there are several requests in the bailout:
• Elimination of Saturday mail service and deliveries.
• Eliminating the agency’s union [American Postal Workers Union] that is preventing the post office from laying off 120,000 employees. Currently, the union has a no-layoffs clause in their contract with 207,000 mail sorters and post office workers.
“Our situation is extremely serious,” said Postmaster General Patrick R. Donahoe. “If Congress doesn’t act, we will default.” The postal service had suffered an $8.5 billion net loss in 2010, compared to only $3.8 billion the year before that.
In June of this year, the postal service had already announced they would skip the retiree fund payments, a federally mandated prepayment, according to an article written by Aaron Smith titled, “Postal Service to skip retiree fund payments.” Additionally, the postal service is now unable to make its $5.5 billion dollar payment to its employee healthcare plan. Due by September 30, cash is unavailable because of their labor costs, fewer packages and letters.
According to the New York Times, two major competitors with lower labor costs are United Parcel Service (UPS) at 53% and FedEx at 32%. The United States Post Office has an 80% labor cost and superior health benefits that are more generous than any other federal agency.
Currently the Senate Homeland Security and Governmental Affairs Committee is holding a hearing today, Tuesday September 6, 2011, regarding the situation. Unfortunately, New York Times is also reporting that the feuding political parties have failed on any solution or compromise, with partisanship possibly forcing the post office to close entirely by winter.
“The situation is dire,” said Thomas R. Carper, the Delaware Democrat who is chairperson of the Senate subcommittee that oversees the postal service. “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.”