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U.S. Postal Service loses even more than projected - $15.9 billion to be exact

By Catholic Online (NEWS CONSORTIUM)
November 16th, 2012
Catholic Online (www.catholic.org)

What with the competition from email and other electronic means of communication, the United States Postal Service has been steadily losing money over the past several years. Now, it's even worse than what was previously thought: The U.S.P.S. said its net loss last year widened to $15.9 billion, more than the $15 billion as had projected. Adding to the woes is the fact that mail volume continued to drop, falling five percent.

LOS ANGELES, CA (Catholic Online) - unless Congress acts, the service will run out of cash on Oct. 15, 2013. According to Chief Financial Officer Joe Corbett, this will occur after the U.S.P.S. makes a required workers' compensation payment to the U.S. Labor Department, before revenue typically jumps with holiday-season mailing.

The service, whose fiscal year ends Sept. 30, lost $5.1 billion a year earlier. The U.S.P.S. announced the 2012 net loss at a meeting at its Washington headquarters.

"We are walking a financial tightrope," Postmaster General Patrick Donahoe says. "Will we ever stop delivering the mail? It will never happen. We are simply too important to the economy and the flow of commerce."

The U.S.P.S. uses about $250 million daily to operate and will have less than four days of cash on hand by the end of the fiscal year, Corbett says.

In reaction, the U.S.P.S. has proposed to Congress to enact legislation before it adjourns this year.  The plan calls for spreading future retirees' health-benefit payments over more years, stop Saturday mail delivery, and more easily close post offices and processing plants.

"The Postal Service is facing a fiscal cliff of its own and any unanticipated drop in mail volumes could send the agency over the edge," Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service says. The coalition includes Bank of America Corp. and Internet auction site eBay Inc.

"If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the 8 million private sector workers whose jobs depend on the mail," Sackler adds.

Without legislative change, the service expects its losses to continue in 2013, with a forecast loss of $7.6 billion for the year that started Oct. 1, Corbett said.

"There is no margin of error," given the low level of cash, Sackler says.

To assist with budget goals, the U.S.P.S. is trying to cut costs by giving retirement eligible workers a financial incentive to retire. Those employees have a Dec. 3 deadline to accept the offer, with $200 million budgeted for the incentive costs in fiscal 2013.

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