Postal Service added to GAO high-risk list for poor fiscal solvency

A congressional auditor has placed the United States Postal Service on its list of “high-risk” federal programs because of concerns over its fiscal solvency.The Government Accountability Office (GAO) said Tuesday that the Postal Service (USPS) is in need of serious transformation because it will lose billions in coming years.The projected net loss for this year is $7 billion, and its cash shortfall will be $1 billion, the GAO said. In 2010, the USPS will lose another $7 billion and will have a shortfall of $4.5 billion, according to GAO projections.

The losses are due to the recession and a shift away from regular mail toward e-mail and other new technologies, the report said. Those factors will lead to a 13.7 percent drop in mail volume from last year, according to the GAO.

“The Postal Service urgently needs to work with Congress and other key stakeholders to develop and implement a restructuring plan to help put it on a more sustainable financial path,” said Gene Dodaro, the head of the GAO and acting comptroller general of the United States, in a statement.

The USPS has suggested several ways to stay afloat, including ending Saturday delivery service, consolidating thousands of its branches and changing the way it pays for retiree health benefits. But lawmakers and unions for postal employees have been cold to the idea of cutting back service and offices, arguing that doing so wouldn’t go over well with their constituents, who are used to seeing mail on the weekends and having nearby postal branches.

bill passed out of the House Oversight and Government Reform Committee would allow the USPS to take money slated for future retiree health benefits and use it for retiree health benefits that are due now, when more employees are leaving the workforce. Sen. Tom Carper (D-Del.) introduced a similar bill in the upper chamber this week.But the GAO urged the Postal Service to take more drastic measures to cut expenses, including having more employees retire, reducing their benefits and consolidating post offices.

The USPS can’t rely on increased revenue through a rebound in mail volume, something that has happened after past recessions but is unlikely to happen this time because of the country’s increased reliance on newer technology, the GAO said.

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