« | »

Post Office May Default As Losses Mount

From CNN’s Money.Com:

Postal Service warns of default as losses mount

By Ben Rooney, staff reporter
February 9, 2011

NEW YORK (CNNMoney) — The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.

The USPS, a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier.

The agency has been suffering from an ongoing decline in mail volume, which has undercut revenues, while retiree health care costs have been straining its reserves.

Excluding costs related to retiree benefits and adjustments to workers’ compensation liability, the Postal Service said it had net income was $226 million in the first quarter, which ended Dec. 31.

But they can’t exclude retirees benefits and workers’ comp. That is the problem. Of course they should have never promised them the moon in the first place.

Despite ongoing cost-cutting efforts, the USPS said it expects to have a cash shortfall this year and to hit its federally mandated borrowing limit by September, when the government’s fiscal year ends

Oh, don’t worry. They will have their debt limit lifted. Just like Congress always does.

The agency said it will be forced to default on some of its financial obligations this year unless Congress changes a 2006 law requiring it to pay between $5.4 and $5.8 billion into its prepaid retiree health benefits each year

In other words, they want the US taxpayer to bail out their retirement plans – just like we did for the United Auto Workers.

The USPS has also cut back on hours to save money. The agency expects to eliminate 40 million work hours this fiscal year as part of a plan to save $2 billion.

However, the service is currently negotiating new contracts with the American Postal Workers Union and the National Rural Letter Carriers Association, which will probably object to cutting hours

You think?

This article was posted by Steve on Thursday, February 10th, 2011. Comments are currently closed.

6 Responses to “Post Office May Default As Losses Mount”

  1. proreason says:

    I thought the Post Office was converted into the Junk Mail Delivery System long ago.

  2. TerryAnne says:

    and to hit its federally mandated borrowing limit by September, when the government’s fiscal year ends…

    Oh noes! To actually hit their limit at the end of the fiscal year and to turn around on 1 October and get a whole new borrowing limit!! The horror of not having a few extra hundred thousand lying around to use for mortgage payments or vacations.

    The poor unfortunate souls. [sniff]

  3. Airmail56 says:

    Next time you look at your mail, look at the postage mark and see if it says ‘ Non-profit Org.” on it. Planned parenthood, AARP & Congress all get free or reduced rate shipping – which the Post Office pays for. In addition, that 6 billion ‘health care’ bill is nothing but a cash cow for the Congress. Sort of like the Social Security payments we all make…

  4. untrainable says:

    The agency expects to eliminate 40 million work hours this fiscal year as part of a plan to save $2 billion. Wish I was making $50/hr during this recession.

  5. canary says:

    The Postal Service and certain politicians like Sen. Collins & Sen. John McHugh started this propaganda the post office was broke and asked for bailouts for the agency even though they had just participated in a major reform over haul. The PO had a 700 billion dollar windfall paid into retirement, and Congress put most of it in escrow. Now the politicians and post office act “again” as if it doesn’t exist. Are they taking advantage of the new clueless administration party.

  6. P. Aaron says:

    I”m sure they’re hiring.


« Front Page | To Top
« | »