Postmaster General David Steiner told senators the Postal Service is relying on deferred retirement obligations to keep operating and needs congressional action to repair what he called a broken business model.
By yourNEWS Media Newsroom
Postmaster General David Steiner warned Congress on Wednesday that the United States Postal Service is running out of money and cannot fix its long-term financial problems without help from lawmakers.
In written testimony prepared for a Senate committee, Steiner said the agency is continuing operations by delaying payments tied to employee retirement obligations, a strategy he said has become necessary because of the Postal Service’s worsening cash position.
“The bottom line is that we are out of cash. We are borrowing from our employees’ retirement funds to continue operations,” Steiner wrote.
He warned that if the Postal Service stopped deferring obligations, it could run out of operating funds within months.
“The Postal Service has a broken business model, and action is needed by Congress to fix it,” Steiner said.
Steiner is asking Congress to compensate USPS for operations that lose money and to approve broader reforms intended to stabilize the agency’s finances.
The warning comes after years of financial losses driven by falling mail volume, costly nationwide delivery requirements and the continuing decline of first-class mail, which has historically been the Postal Service’s most profitable product. USPS has reported net losses of about $120 billion since 2007 as more communication has shifted online while the agency remains responsible for maintaining a nationwide delivery network.
One major issue before lawmakers is whether USPS should continue delivering to 170 million addresses six days a week. Steiner said that requirement costs $3.4 billion annually and that 70% of those delivery routes lose money.
The Postal Service is also facing losses across much of its retail footprint. About 58% of its 18,000 Post Offices lose money, Steiner said.
In March, Steiner said USPS was hiring restructuring advisers to help address its financial problems.
The agency has already begun cutting discretionary expenses. Last month, USPS said it was suspending nonessential spending on travel, office supplies and consultants. In a memo to officers, Steiner said the limits were being imposed “to protect core operations and ensure we can continue meeting all essential obligations.”
USPS has also moved to preserve cash by temporarily suspending employer payments into a federal pension program. The Postal Service said last month that the suspension would conserve $2.5 billion through Sept. 30 and potentially $15 billion through 2030.
The agency is also moving ahead with another stamp price increase. The price of a first-class mail stamp is scheduled to rise from 78 cents to 82 cents on July 12.
Steiner’s testimony placed responsibility for long-term changes on Congress, arguing that without legislative action, the Postal Service will remain trapped between declining revenue and legally required services that the agency says it can no longer afford under its current structure.
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