10.22.2012
Is USPS Bankrupt? $15 Billion Debt, Defaults on $5.5 Billion Loan
original article written by Net Advisor™
WASHINGTON DC. The United States Postal Service reached its maximum borrowing limit of $15 Billion from the U.S. Treasury. As of June 30, 2012, USPS also lost $5.2 Billion (Source: CNN).
If these numbers were not startling enough, the USPS also defaulted on a $5.6 Billion (taxpayer funded) loan to cover healthcare cost for “future retirees” (Source: Chicago Sun Times PDF).
[1] From “Self-Sufficient” to Technical Bankruptcy in Just 4 Years
The USPS went from $600 Million in debt to $15 Billion in debt (a 2,400% debt increase), coincidentally all under the Obama Administration’s watch over the last 4 years. Is there a pattern here? The U.S. deficit also went from $10 Trillion to over $16 Trillion in debt – a 60% increase in just 4 years with nothing to show for it (report).
Up until sometime after we published this report, the USPS union maintained a webpage that said the USPS is “self-sufficient.” The website did not reflect the status of adding $14.4 Billion in new debt. The website also said it does not rely on taxpayer assistance, which is no longer an accurate statement.
“The U.S. Postal Service is self-sufficient, (had a deficit of only) “$0.6” (that’s $600 million in 2008 and) does not need tax payer assistance“
— Source: National Association of Letter Carriers, AFL-CIO, 06-30-2008 (PDF)
UPDATE: Since our 2012 report, the union’s claim that the USPS “does not need taxpayer assistance” and their entire argument in support of such claim has been deleted from its website and replaced with this message. Here are the original claims (PDF).
In 2010, I wrote a lighthearted article, “A Day at the Post Office.” In brief, the article used a little humor to discuss how government essentially had employees doing duplicate work. USPS has moved or deleted the links from that article that specifically discussed their financial issues.
Since 2007, USPS reportedly lost $20 Billion (Source: Business Insider PDF). This includes an $8.5 Billion loss in 2010 (Source: USPS Inspector General’s 2011 Report, 39pps PDF)
[2] Closing Post Offices Not Really Cutting the Debt
In 2011, USPS closed 3,700 offices, and has another 32,000 still running along with another 70,000 USPS approved third-party retailers to handle mail services (Source: Fox Business).
[3] 2013 New Rate Hikes
For 2013 USPS plans on raising postage prices including a 9.8% hike in parcel shipping services for items weighing less than one pound. The people who would be most affected seems to be those who receive mail-order prescription drugs (Source: DC Velocity). USPS also has further job cuts.
It was reported (PDF) that “raising the price of postage five cents could add $1 billion in revenue.” By that account, then all the USPS has to do is raise postage another 75 cents for a 1st class letter and the $15 billion deficit goes to zero? Since government and labor unions are involved, we don’t think this will happen.
Just last Augusts 2012 Labor Unions oppose job cuts and change benefits, despite the fact the USPS is technically bankrupt (Source: Fox News PDF).
__________________________________________________________________________
Graphics Credit: USPS; Chart: wikipedia.org.
original content copyright © 2012 NetAdvisor.org® All Rights Reserved.
NetAdvisor.org® is a non-profit organization providing public education and analysis primarily on the U.S. financial markets, personal finance and analysis with a transparent look into U.S. public policy. We also perform and report on financial investigations to help protect the public interest. Read More.
__________________________________________________________________________
