Reality Check: Why the postal service has to make cuts

Published: Sep. 28, 2011 at 2:24 AM EDT|Updated: Sep. 28, 2011 at 10:34 AM EDT
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(FOX19) - Thanks to email and on-line bill pay, the problems for the United States Postal Service have been on-going and only getting worse.

And now the problems are coming to a head.

The facts:

Dec 2006: President George W. Bush signs a law requiring the agency to set aside about $5 billion each year for future health benefits of its workers.

That law was passed because the Postal Service was beginning to lose money and couldn't pay the benefits it owed to workers.

2007-2008: the Postal Service began reporting multibillion-dollar losses.  Mail declined by more than 11 billion pieces by 2008, again, because of e-mail and online bill pay.

Sept-Nov 2009: Congress allows the agency to defer $4 billion of a scheduled $5.5 billion payment for retiree health benefits.

Even with that help, in November, the agency still posts $3.8 billion in net losses for the year.

Are you getting the idea of what kind of financial shape the post office is in?

Jan 2010: The Postal Service attempted to cut costs by closing 1,000 post offices.

Here's the problem, local communities fought back and lawmakers caved.  Instead of 1,000 post offices, the number of closures was scaled down to 162.

Now, the Postal Service says it will incur $238 billion in losses in the next 10 years.  It has proposed eliminating Saturday delivery, shutting post offices and raising its prices.  All of those moves need Congressional or regulator approval.

Nov 2010:  In spite of cutting 100,000 jobs, the postal service reports $8.5 billion in losses for the year.

Mail volume has fallen an unprecedented 20 percent since September 2006.

Which brings us to this year.

June 2011, Postal Service officials warn they will hit their $15 billion borrowing limit this year and will probably default on its health benefits payment this month.

So here is what they have proposed.

  • Cutting 220,000 positions, or 30% of its staff by 2015.
  • 100,000 jobs would disappear through attrition,  120,000 employees eliminated through layoffs.
  • Also, closing down 3,700 locations as well as 300 processing facilities by 2015.
  • That includes the processing facility here in Cincinnati near Queensgate.

Here is what you need to know:

One of the proposals to raise money is to start featuring people on stamps who are still alive.

The public can help choose the top five living honorees on the postal service's Facebook or Twitter pages.

Officials hope this will help encourage more young people to buy stamps.

Really?  The U.S. Postal Service is becoming obsolete and bankrupt.  Get this, officials have to reduce their annual operating costs by $20 billion dollars by 2015 to no longer be running a deficit.

That means, someone has to summon the fortitude to lay-off workers that the service can't afford, and close processing facilities.  Because even stamps with Tricia Macke won't sell 20 billion a year.

And that is Reality Check.

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