The Postal Service reported last week that it lost $8.5 billion for the 2010 fiscal year ending September 30. This followed losses of $3.8 billion in FY 2009 and $2.8 billion in 2008.

Continued mail volume loss, unexpectedly high Workers' Compensation costs, and no legislative relief for retiree health benefit liability costs contributed to the massive loss. Expenses were down compared to the previous year, but not enough to offset the revenue decline.

The Postal Service handled 170.6 billion pieces of mail in 2010, down 3.5% from the 177 billion pieces handled in 2009. In 2008 total mail volume was 202.7 billion pieces and in 2007 it totaled 212 billion pieces. On a positive note, the Postal Service projects an increase in mail volume to 172.5 billion pieces in 2011.

First-Class Mail volume declined by 6.6% in FY 2010, following declines of 8.6% in 2009 and 4.8% in 2008. First-Class Mail represents more than half of all Postal Service revenue, and its continuing decline is a major problem. Standard mail volume came back from a 10.9% decline in the first quarter of FY 2010 (Oct.-Nov.-Dec 2009), with growth of .7% in quarter two, 4.6% in quarter three, and 8.9% in quarter four.

The Postal Service continued to reduce cost through the elimination of workhours. Postal Service Chief Financial Officer Joe Corbett said "over the last two years, the Postal Service realized more than $9 billion in cost savings, primarily by eliminating about 105,000 full-time equivalent positions---more than any other organization, anywhere."

He went on to say "we will continue our relentless efforts to innovate and improve efficiency. However the need for changes to legislation, regulations and labor contracts has never been more obvious."
Give USPS a viable trust-fund payment schedule
By Edolphus Towns
The obstruction by key Republican senators who refused in late September to grant the U.S. Postal Service partial deferment of trust fund payments has driven the agency close to a breaking point. Because USPS was forced to make this $5.5 billion payment into its already well-funded retiree health benefits trust fund, its cash reserves now sit at a dangerously low level, leaving it in a precarious financial position for fiscal 2011. Moreover, according to the independent Postal Regulatory Commission, this annual payment is part of an "overly optimistic" payment schedule that is "the principal cause of the Postal Service's impending liquidity crisis."

In 2006, the Republican Congress passed the Postal Accountability and Enhancement Act forcing the Postal Service to pay more than $55 billion of an estimated $87.5 billion liability for future retirees into a trust fund in just 10 years. The front-loaded payments were pure budget gimmickry by the Bush administration and the Republicans to make the budget appear balanced.

No company or government agency is required to make such onerous pre-payments, on top of benefits for current employees and retirees, and for good reason - the companies would be bankrupt if they did. Sound policy would have required the Postal Service to pay the $87.5 billion incrementally over 40 or 50 years.

The Postal Service is now suffering greatly from years of misguided Bush-era policies. Millions of Americans are relying on Congress to fix these past mistakes, and that's exactly what Democrats are working to do. Our proposal would reduce the annual trust fund payment to a more reasonable level and require the remainder of the payments into the retiree health benefits trust fund to occur in scheduled installments over 40 years, starting in 2017.

Last year, the Democratic Congress included language in appropriations legislation to reduce the 2009 payment from an unreasonable $5.4 billion to a more manageable, but still significant, $1.4 billion. When Democrats sought to execute the same legislative strategy again this year, several Republican senators cynically maneuvered to block the legislation. They falsely and irresponsibly argued that this proposal aimed to shift the payment burden to taxpayers. In reality, with last year's reduced trust fund payment, the health benefits fund is well-capitalized and currently contains about $40 billion.

If the unsustainable trust fund payments are kept in place and the Postal Service runs out of money, taxpayers will eventually have to pick up the tab. This is the policy that congressional Republicans are supporting - knowingly pushing the Postal Service to the brink of insolvency and putting taxpayers at risk. Instead, we can stabilize the agency and avoid the need for a future taxpayer bailout by pursuing a responsible plan that involves contributing to the trust fund over time.
Rather than play political football with the Postal Service, members of Congress need to put aside their differences and focus on executing a strategy that will keep the organization viable. We must begin the process of imposing a more reasonable and responsible payment schedule for retiree benefits while working in a bipartisan fashion to contain other costs, expedite the pace of innovation and strengthen management. Far too many Americans rely on the Postal Service for Congress to allow it to sink deeper in peril.

Congress and the Postal Service must come together now to address the problems facing the venerable service.
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