Obama Throws the USPS a Lifeline
WASHINGTON, DC—In an effort to cut costs and help offset dwindling mail volume, the United States Postal Service (USPS) could close as many as 2,000 facilities in addition to the nearly 500 previously targeted for closure, according to the Wall Street Journal (WSJ). While the news organization termed the facilities as "post offices," a majority of the locations ticketed for closure are actually stations and branches, typically smaller places without retail capabilities.
The WSJ also reported that the USPS is currently reviewing 16,000 post offices operating at a deficit. The Postal Service is pushing Congress to change the current law that allows for facility closures under circumstances other than financial performance. The USPS posted $8.5 billion in losses for fiscal year 2010.
Facing the prospect of having maxed out its borrowing capabilities and not being able to meet its financial obligations by September, however, the USPS received a lifeline in the form of President Obama's 2012 budget, which would provide $4 billion in temporary financial relief in 2011.
The move is less a bailout and more of a correction and reallocation of funds. USPS had overpaid its Federal Employee Retirement System (FERS) a whopping $6.9 billion. The budget proposes to repay the Postal Service over a 30-year span, with $550 million coming back in 2011.
Obama's budget also provides relief on the USPS' requirement to pre-fund retiree health benefits, providing a payment scheduled that stretches over 40 years, beginning in 2017. The budget envisions these relief solutions enabling the USPS to continue restructuring its operations, but cautions that meaningful reform is still necessary to keep it viable for the long term.