How often do you go to the mailbox and there was no delivery that day? Just imagine not receiving mail on Saturday, will a 5-day delivery impact your life? The United States Postal Service is in danger of losing its 6-day delivery. Ending Saturday delivery would restore some financial stability and would save the Postal Service 2 billion dollars a year. The Postal Service receives no tax dollars for operating expenses. It relies on sales of postage, products, Liteblue USPS Gov Login and services to fund its operations (According to the USPS website). Package delivery is showing a significant increase, however it has to compete with UPS and FedEx for this share of the market. Saturday delivery is just the icing on the cake. The definition of a liability states that a company is legally bound to pay a debt. The future retiree health care benefit liability is one of the succeeding forces that is making the Postal Service go on a downward spiral. liteblue usps
First, lets look into the past to get an understanding of the current issue. The Postal Service was doing very well financially in 2006 mail volume was at an all time high, 213 billion pieces. In 2006 the Postal Accountability and Enhancement Act was created by Congress to set in place installment payments to make sure that future retiree health care benefits would be paid for next 75 years. No other business in that sector has been required to make that type of payment.
There are also other factors pushing the Post Office into the ground, decline in mail volume and economical changes caused by the electronic age, mainly the Internet. The mail volume in 2011 was at 168.8 billion pieces compared to 2006 with 213 billion pieces. That’s is a whopping 44.2 billion drop with a projected decline to 150 billion pieces of mail by 2020. That’s why there is much debate between the Congress and the Postal service to push no Saturday delivery. The decline in mail volume and economic forces has forever changed the Postal Service.
What should the U.S. Postal Service do to fix their impending liability problem? The Postmaster General wants to access money in the Civil Service and Federal Employees Retirement System. He has requested to Congress on several occasions to access several billion dollars in overpayments. He believes that this will address the financial liabilities.
On the other hand, many believe that a change in estimate payments will fix their liabilities. One of the suggestions was to have a 40-year amortization schedule to minimize payments and to stretch out the amount of time. Another was to front load the payments and have larger payments toward the end. Right now their liability of prefunding retiree health care benefits payments is 5.5 billion and to be fully funded in 10 years. The USPS reported a net loss of 5.1 billion dollars in 2011. In the past two years they have defaulted on their liability payments and deferred the payments to help them maintain stability. The projected net loss in 2012 was around 14 billion and 11 billion of that was the deferred retiree health care payment. They also claim that the defaulted payment doesn’t affect current postal operations. Why then are they closing Post Offices, selling buildings, and consolidating processing facilities?