U.S. Postal Service: Another Looming Crisis
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.