Kevin R. Kosar
Analyst in American National Government
This report provides an overview of the U.S. Postal Service’s (USPS’s) financial condition, legislation enacted to alleviate the USPS’s financial challenges, and possible issues for the 112th Congress.
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.
In recent years, the USPS has experienced significant financial challenges. After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011. Were it not for congressional action, the USPS would have lost an additional $9.5 billion.
In the first three quarters of FY2012, the USPS had an $11.5 billion operational loss. The USPS did not have sufficient cash to make a $5.5 billion payment to its Retiree Health Benefits Fund (RHBF) that was due on August 1, 2012. The USPS is unlikely to have sufficient liquidity to make a $5.6 billion RHBF payment due on September 30, 2012.
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.
This report will be updated after the USPS releases its quarterly financial results in early November 2012, and in the interim should there be any significant developments.
Date of Report: August 10, 2012
Number of Pages: 20
Order Number: R41024
Price: $29.95
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