Postal Service hits borrowing limit
Agency can only borrow $15 billion at a time.
Congress went into recess without moving on postal reform, and now the cash situation at the U.S. Postal Service is looking mighty grim: the agency hit its congressionally determined $15 billion borrowing limit on Sept. 28, USPS spokesman David Partenheimer confirms to the Alley.
The USPS can only borrow from the Treasury Department $15 billion at a time. The agency defaulted on a $5.5 billion payment for future retiree benefits in August, and on another in September.
Service will continue and employees will still get paid. "However, our liquidity situation remains a serious issue and that is why we need passage of comprehensive legislation as part of our five-year business plan to return to long term financial stability," Partenheimer writes in an email.
The lame duck will be chock full of sequestration and fiscal cliff work. But the private mailing industry, which relies on USPS, has been trying to keep a message of urgency going through the recess, with the hope Congress will act when it reconvenes.
"With its borrowing limit reached, the Postal Service is now walking a tight rope with no net," said Coalition for a 21st Century Postal Service coordinator Art Sackler said in a statement. "There are 8 million private sector jobs that depend on the mail, and there would be catastrophic economic consequences if the Postal Service shuts down. The longer Congress waits to enact postal reform, the more difficult and more expensive the solutions become."
Over the summer, that industry coalition, which includes the likes of ebay, Conde Nast and the Parcel Shippers Association, called for the House to vote on a postal reform bill (the Senate has already passed its own version).
But the House bill, proposed by Republican Reps. Darrell Issa and Dennis Ross, would have been a difficult election year vote; it allows cuts in service (tough vote for rural members) and collective bargaining rights (tough for members from union-heavy districts).
For now, the USPS is humming along in its first quarter, traditionally its best thanks in large part to holiday mailing. And in the irony of ironies, they're also getting a boost in revenue due to campaign mailers, according to Partenheimer. So if election year politics has stalled passage of a reform bill, it's also sending some much needed cash USPS' way.