The U.S. Postal Service is on the brink of defaulting on its employee pension obligations and is asking congressional leaders for assistance, but U.S. Rep. John Yarmuth, D-Ky., says lawmakers may have too much on their plate to help the ailing agency.
Postmaster General Patrick Donahoe told a Senate committee Tuesday the agency was likely to run out of cash before the end of the month. The Postal Service faces a $10 billion deficit for the fiscal year and must make a $5.5 billion payment to retiree benefits due on Sept. 30.
Donahoe warned the agency could shutdown next year unless Congress approves a long-term financial solution.
Congressman Yarmuth say lawmakers could help the ailing agency by refunding nearly $7 billion in overpayments to the federal employee pension system. But he says the agency faces some tough choices due to changing technology that has made mail delivery almost obsolete.
“The postal service does face some structural and long-term problems and that basically comes from the business that they’ve lost because of the Internet. This would not serve their long-term problems, but it certainly would solve their short-term obligations and again this is not money that would cost the taxpayer anything,” he says.
In April, Yarmuth co-sponsored a bill that would take those overpayments and apply them toward the health insurance pre-funding obligations.
Donahoe has introduced a number of controversial proposals to bring down costs, such as cutting Saturday mail delivery to save the Postal Service about $3 billion a year. The White House announced it will unveil a plan to stabilize local post offices and delay the $5.5 billion payment by three months.
However, Yarmuth says it’s a “long-shot” Congress will be able to address the issue before the end of the month given more pressing matters such as a the gasoline tax, extending the Federal Aviation Administration and drafting a funding mechanism for the government.
“I don’t think they’re on a hard and fast deadline,” says Yarmuth. “What they are talking about is money that’s paid to the federal government that they owe. And if they don’t pay it it’s not like the federal government is going to say ‘stop delivering the mail’. It is a deadline of sorts, more like a due date and it’s not necessarily going to shut the post office down on September 30.”
Numerous suggestions have been made for ways to reinvent the mail service. Postal Service union leaders have already come out against layoffs and restructuring employee benefits.
But Yarmuth says labor groups must be willing to make changes that might help the Postal Service become financially viable over the long-term while the agency should try to protect benefits.
“What you have are people who have committed their lives to serving the communities and they negotiated in good faith. And at this point telling people who have spent their lives in the postal service that all of a sudden the rules have changed for them is something that I don’t think any employee anywhere in the country would want to have happen,” he says.