U.S. Postal Service: Another Looming Crisis

Lisbeth Lyons.

Quad/Graphics’ Joe Schick.

Jim Andersen of IWCO Direct.

Potential Default Looms

The losses have caught up to USPS. It is projected to reach its statutory borrowing limit ($3 billion per year/$15 billion) by the end of its fiscal year in September. At that time, a $5.5 billion RHB bill and a $1.2 billion workers’ compensation liability will come due. Mr. ZIP will fall about $2 billion to $3 billion shy. Thus, on Sept. 30 of this year, the Postal Service will default. What happens then is anyone’s guess, as the post office’s existence is constitutionally mandated. Mr. ZIP won’t be collecting unemployment.

Fiscal relief for the USPS can come from any number of avenues, notes Lisbeth Lyons, vice president of government affairs for Printing Industries of America (PIA). The PIA is a member of the Coalition for a 21st Century Postal Service, which also testified before the subcommittee in March. Lyons is concerned that the “bailout” buzz word threatens to drown out the necessary, substantial conversations that need to take place.

“The overpayment issue is one we’re going to (get behind),” Lyons says. “It has the potential to be more of a game changer in helping the Postal Service. Addressing and restoring what the USPS said it’s overpaid to the Civil Service Retiree System would definitely allow the Postal Service to have a stronger business model.”

Unfortunately, at the time this was written, there seemed to be a bit of a discrepancy as to the CSRS overfunding; even though the $75 billion figure was verified by independent auditors, the Office of Personnel Management (OPM) came up with a different calculation, she notes.

Since the USPS won’t be able to make its $5.5 billion payment, and given that it’s not legally allowed to go under, a two-year deferral on the payment is a possible—and the most likely—scenario, according to Lyons. This will give politicians more time to work on either 
sprucing up PAEA or coming up with a new solution altogether.

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  • http://J.Jameson J. Jameson

    Sirs, This is one of the most accurate depictions of the alleged postal crisis that I have read. The “postal crisis” in it’s entirety was created by Congress when it passed the PAEA in 2006. It is easy to bankrupt ANY company when you raise their bills to the point at which they cannot pay them.
    Congress, courtesy of Susan Collins of Maine, has purposely destroyed postal finances for reasons that no one will answer to. Given that the PAEA was an accidental mistake, why was it not repealed immediately, particularly in the face of the recession? Why has the Congress NOT refunded the $60 or so billion that the Treasury has been overcharging the Post Office for the past forty years? Why do some members of Congress keep calling the return of these funds a “bailout” when they know full well that it is not. In some circles that would be called lying.

    And the biggest question of all, why has it taken the media so long to tell the truth concerning why the Post Office is in financial trouble, when the facts have always been there?