NCPA - National Center for Policy Analysis


November 30, 2009

The U.S. Postal Service announced this week that it lost $3.8 billion in the most recent fiscal year, which ended September 30th.  It also delivered less mail -- 26 billion fewer pieces, a nearly 13 percent drop from the previous year.  The bad news follows losses totaling $7.8 billion in 2007 and 2008.

The Postal Service is legally prohibited from taking tax dollars.  But in order to stay afloat, the agency has been actively borrowing from the U.S. Treasury: At last count, according to Postal Service spokeswoman Yvonne Yoerger, it owes the government $10.2 billion.


  • Federal law dictates that the Postal Service can borrow up to $3 billion per year -- but the debt cannot grow beyond $15 billion.
  • That means that while the agency, which had revenues of $68.1 billion last year, could potentially borrow another $3 billion in 2010, it will soon no longer be able to legally borrow billions from the government.
  • Meanwhile, the Postal Service is estimating that without significant changes, it will lose another $7.8 billion in the coming year -- and deliver another 11 billion fewer pieces of mail.

Which raises the question: Can the Postal Service be saved?

The agency cut $6 billion in expenses over the past year, eliminating 40,000 of its roughly 750,000 jobs and slashing overtime hours.  But it says that isn't enough.  And it's pushing for two major changes that it suggests could help get it back into the black in 2010:

  • The first is freedom from a government-mandated requirement that the agency pay more than $5 billion per year into a fund to cover its retired employees' future health benefits over a ten-year period; the government allowed the agency to forgo $4 billion of that obligation this past year, but the requirement remains on the books.
  • The second goal is to end Saturday mail delivery; the Postal Service has suggested cutting Saturday service could save $3.5 billion per year, though the Postal Regulatory Commission (PRC), which regulates the Postal Service, puts that figure at $2 billion.

Source: Brian Montopoli, "Can the Postal Service be Saved?" CBS News, November 19, 2009.

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