For the first time in its 237-year history, the USPS hit its congressionally mandated borrowing cap, which now stands at $15 billion. The organization will now have to rely on revenue from stamps and shipping, which has been falling for some time now. The holiday season mail flurry may keep the service running for a couple months, but the problem will rear its head again in January:
The Postal Service has added $2.4 billion to its debt since June 30, pushing the agency to its borrowing cap, said Postal Service spokesman David Partenheimer.Being at the limit is a serious situation because our limited liquidity does not give us operating flexibility,” he said. “Without passage of comprehensive legislation as part of the Postal Service’s business plan to return to financial stability, we continue to project low levels of cash.” . . .The Postal Service taps lines of credit from the Treasury to cover costs when revenue falls short. But declining first-class mail volume, growing retiree obligations and other expenses have led it to rely often on government loans to pay for its operations. The agency had a $5.2 billion loss in the quarter ended June 30, the most recent data available.
It’s easy to point a finger at incompetent postal service management, but Congress ought to shoulder some blame too. It has consistently used its power of oversight for political patronage rather than allowing the institution to make the necessary changes to remain solvent. And given the current gridlock in Washington, not to mention the continued standoff over the “fiscal cliff,” it’s doubtful that any solutions will come before January, or even after.