The government is facing a default.
The summer showdown over the federal debt limit was caused by politicians, but one agency is in fact confronting an authentic inflection point - the United States Postal Service. As the New York Times reported on September 4, the USPS does not have enough cash on hand to make a $5.5 billion payment due this month.
"Our situation is extremely serious," the postmaster general, Patrick R. Donahoe, told the Times. "If Congress doesn't act, we will default."
The September 30 deadline does not implicate the entire service of federal mail delivery in America. Rather, it represents a firm date for retirees' health care financing. And as serious as that is, a true countdown to Armageddon suggests that the agency will literally halt service on the three billion parcels it delivers weekly sometime in early 2012 if no action is taken.
In the face of such a daunting climate, the USPS has been making a last-ditch effort to cut losses and reorient the independently run agency for the digital age. As was originally reported in the Washington Post, Donahoe has been championing a plan that would see the closure of 3,700 postal locations and the firing of 120,000 postal workers. An end to Saturday delivery would also be called for. The plan, announced in a workforce optimization draft, was drafted in light of losses totalling $20 billion over the last four years. In that time, mail volume has dropped 20 percent, the Post reports.
The USPS could be particularly difficult to reorganize. A no-layoff clause is already in place with the agency's unionized workers. USPS workers are also the beneficiary of handsome health and retirement benefits, which Donahoe has also suggested pulling back on. And as a report on thejobmouse.com reports, labor costs represent 80 percent of the agency's expenses, as compared to 53 percent at United Parcel Service, and 32 percent at Fedex.
Congress opened hearings Tuesday about an overhaul of the USPS. In statements gathered by the Hill, the spokesman for USPS is primed to push back against Donahue's plan.
"The Postal Service, having been engaged in several years of cost cutting, has become like the man whose only tool is a hammer," Guffey says in testimony obtained by The Hill and to be delivered before the Senate Committee on Homeland Security and Governmental Affairs. "To him, everything looks like a nail."