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Monday, October 18, 2010

The U.S. Postal Service’s Financial Condition: Overview and Issues for Congress

Kevin R. Kosar
Analyst in American National Government

This report provides an overview of the U.S. Postal Service’s (USPS’s) financial condition, recent legislation to alleviate the USPS’s financial challenges, and possible issues for the 111th Congress. It also addresses current legislation that aims to improve the USPS’s financial condition—H.R. 22, S. 1507, H.R. 5746, and S. 3831.

Since 1971, the USPS has been a self-supporting government agency that covers its operating costs with revenues generated through the sales of postage and related products and services.

Recently, the USPS has experienced significant financial challenges. After running modest profits from FY2004 through FY2006, the USPS lost $5.3 billion in FY2007, $2.8 billion in FY2008, and $3.8 billion in FY2009. (Were it not for congressional action, the USPS would have lost $7.8 billion in FY2009.)

With an operating deficit of $5.2 billion in the first three quarters of FY2010 and limited borrowing authority remaining, the USPS may not have sufficient cash to continue operations throughout FY2011.

A number of ideas have been advanced that would attempt to improve the USPS’s financial condition in the short term so that it might continue as a self-funding government agency. All of these reforms would require Congress to amend current postal law. The ideas include (1) increasing the USPS’s revenues by altering postage rates and increasing its offering of nonpostal rates and services; and (2) reducing the USPS’s expenses by a number of means, such as recalculating the USPS’s retiree health care and pension obligations and payments, closing postal facilities, and reducing mail delivery to less than six days per week.



Date of Report: October 5, 2010
Number of Pages: 23
Order Number: R41024
Price: $29.95

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