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Reform Delayed, USPS Must Seek More Cost Savings

January 4, 2013
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WASHINGTON, DC—The 112th Congress allowed Mr. ZIP to go over the fiscal cliff without a reform package for the U.S. Postal Service (USPS), though both chambers are promising swift action to help the institution find its way to a sustainable track.

The USPS has all but maxed out its options: It lost nearly $16 billion in fiscal year 2012 and is losing money at an alarming clip, an estimated $25 million per day. The five-year plan it drew up, one that promised $22 million in annual cost savings while closing more than 200 of its 461 mail processing plants, was incumbent upon Congress restructuring health care and pension obligations, as well as terminating Saturday delivery.

Senator Tom Carper (D-DE), chairman of the Senate Homeland Security and Governmental Affairs Committee, and Rep. Darrell Issa (R-CA), chairman of the House Oversight and Government Reform Committee, issued a joint statement this week promising Congress' full attention to the need of USPS reform.

“Although the 112th Congress did not come to a consensus around a package of reforms that can update the Postal Service's network and business model to reflect the reality that it faces today, we remain committed to working with our colleagues in both the House and the Senate to reform the Postal Service so it can survive and thrive in the 21st century. While our approaches have differed in the past, we made significant progress in narrowing our differences in recent months, and our commitment to restoring this American institution to long-term solvency is unwavering.”

Postmaster General Patrick Donahoe termed the lack of Congressional action in 2012 "disappointing." He pointed out that the USPS has been mindful of Congress' needs for flexibility; Donahoe slowed the pace of consolidating mail facilities as to not step on Uncle Sam's toes. In the past two years, the USPS reduced its career employee head count by 60,000 and consolidated 70 mail processing facilities. Absent the reform, however, Donahoe needs to look for more ways to keep the USPS solvent.

"As we look to the coming year, we are on an unsustainable financial path," he said. "We are currently losing $25 million per day, we have defaulted on $11.1 billion in Treasury payments and exhausted our borrowing authority. The Postal Service should not have to do business this way, which has undermined the confidence of our customer base and the $800 billion mailing industry we serve. We will be discussing with our Board of Governors a range of accelerated cost cutting and revenue generating measures designed to provide us some financial breathing room.
 

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