It's no secret that the United States Postal Service (USPS) has been struggling for years. The company has seen its revenues fall in the face of email and the new internet economy.
In February, the USPS announced that it would be dropping Saturday mail delivery to try and cut its losses. However, congress just this month passed a resolution barring the USPS from getting rid of Saturday delivery. It's the type of congressional mandate that Postmaster General Patrick Donahoe has been complaining about in every dismal USPS quarterly financial disclosure.
This week, the U.S. House Oversight and Government Reform Committee held a hearing titled Options to Bring the Postal Service Back From Insolvency. Donahoe was invited to give testimony at the hearing, during which he revealed just how bad the situation is for the USPS.
"In the past two years, the Postal Service has recorded $21 billion in losses, including a default of $11.1 billion in payments to the United States Treasury," said Donahoe. "The Postal Service has exhausted its borrowing authority and continues to contend with dangerously low liquidity. We are losing $25 million a day, and we are on an unsustainable path."
Donahoe went on to outline the usual points made by the USPS when addressing its financial situation. First class mail use has dropped 28% since 2007, and the Postmaster General complained that restrictive laws governing the Postal Service prevent it "from fully responding to these changes in consumer behavior."
Donahoe's testimony was then countered by Fredric Rolando, the president of the National Associatio of Letter Carriers (NALC), the union that represents the USPS' letter carriers. Rolando stated that the congress-mandated pre-funding of retiree health benefits is the major factor in the USPS' insolvency.