‘Postal Service is at the Brink of Default,’ Postmaster General Says

 Postmaster General Patrick Donahue issued a plea to Congress today: Take congressional action now to help the Postal Service avoid financial collapse. “The Postal Service is at the brink of default,” Donahue warned at a hearing before the Senate Committee on Homeland Security and Governmental Affairs Committee.  “Our situation is urgent.  The congressional action is needed immediately to avoid this default.”

As it recovers from its second straight year of losses of more than $8 billion, the USPS faces a mandated $5.5 billion payout to cover retiree health benefits by the end of the fiscal year, and is asking Congress to enact the appropriate legislation.

OPM Director John Berry said the White House would release a detailed plan to save the Postal Service in the coming weeks as a part of a $1.5 trillion deficit reduction package.  In the meantime, the administration is asking for a 90-day extension for the Postal Service to pay the $5.5 billion retiree health care payment.

Donahue has proposed dramatic cost cutting initiatives, from eliminating Saturday delivery service to decreasing the Postal Service work force by 20 percent, as well as such  revenue increasing measures as permitting the delivery of beer and wine, and allowing the Postal Service to determine its own prices based on demand.

“The Postal Service requires radical changes to its business model for it to remain viable into the future,” Donahue said.

Donahue warned that if congressional action is not taken by next September, the post office’s operating ability would be severely hampered by a lack of funding to pay salaries and outside contractors.

Sen. Joe Lieberman, I-Conn., chairman of the Senate Committee on Governmental Affairs, voiced concern, as the post office sits on the “verge of bankruptcy.”

“We must act quickly,” Lieberman said.  “The U.S. Postal Service is not an 18th century relic. It is a 21st century national asset, but times are changing rapidly now and so, too, must the post office.”

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