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Daily Dose: Postal Service Running Up Against Debt Limit

The Postal Service may be faced with a debt ceiling crisis of its own come September 30th. The agency is reporting third quarter losses in excess of $3 billion and anticipates that they will default on payments to the federal government by the end of the fiscal year.

The loss for the quarter that ended June 30 narrowed from $3.5 billion during the same period in fiscal 2010. But the Postal Service said it will have a cash shortfall and will have reached its legal borrowing limit by the end of the fiscal year, when it must make a $5.5 billion payment to a trust fund for health benefits for retirees.

Postal Service Reports More Losses in Third Quarter

Postmaster General Patrick Donohoe is currently lobbying for Congress to take action, including passing a proposal to end Saturday mail delivery. With USPS on track to lose a staggering $9 billion this year, drastic action is needed to keep the agency afloat. However, eliminating Saturday delivery seems like it might further contribute to the decline in mail usage, as competitors deliver nearly round the clock and offer superior package tracking capability. Additionally, while this measure would save about $3 billion, it does little to address the ballooning cost of pensions and healthcare benefits.

Do you think the Post Office should keep cutting services or would they be better off to adopt a model similar to private mailing companies like FedEx or UPS?


“Daily Dose of the Washington Post” is a blog series created by GovLoop in partnership with The Washington Post. If you see great a story in the Post and want to ask a question around it, please send it to [email protected].

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Preston G. Baker

The USPS needs to change its business model and embrace today’s technology if it is going to compete with FedEx, UPS and the other delivery services. The use of snail mail is dwindling rapidly. How many of your monthly bills are now paperless via e-mail? When was the last time you bought a stamp to mail a letter or birthday card? Raising the price of a stamp will not help if less and less people have a need to buy them. The USPS must adapt and find its niche in this digital world otherwise Congress will simply continue to throw money at a sinking ship.