USPS As Victim

David Williams, U.S. Postal Service inspector general, says the agency's financial woes are the result of some unfair circumstances.

"The Postal Service needs to be saved from the federal government," he told members of the House Appropriations Financial Services Subcommittee on Friday. "We're being victimized, and we have to get out from under it."

USPS lost $329 million in the first quarter of fiscal 2011. If not for workers' compensation liabilities and contributions to its retiree health benefits fund, the Postal Service would have had a profit of $226 million during that period. The agency is required to prefund retiree health benefits at $5.5 billion annually, and has overpaid its Civil Service Retirement System account by $75 billion and contributed $6.8 billion in excess of Federal Employees Retirement System obligations.

USPS Chief Financial Officer Joseph Corbett on Feb. 9 said the Postal Service does not expect to meet its cash obligations this year and will reach its statuory borrowing limit.

During the hearing, Williams gave lawmakers a few ideas for how to bring the struggling agency back to life.

On prefunding requirements: "Come September, when we make those [annual] payments, we'll be in the hole by $2.7 billion and all the money will have been borrowed. Discussions have occurred over whether to make those payments. If they are not made, it will allow time to resolve this issue; if made, it will be very serious."

On pension overfunding: "FERS is overfunded, and the rate of inflation [the Office of Personnel Management] has set is much more aggressive than the private sector and other government industries. What I would most like to see is the Postal Service make a proposal to Congress with regard to pension and health funds rather than being run by OPM."

On post office closures: "We think probably about a third of post offices need to be validated on whether they should continue or not."