A new analysis explains just how much the USPS benefits from the subsidies it receives from the federal government. Then make future payments into the health fund for retirees actuarially based. FORTUNE may receive compensation for some links to products and services on this website. By the end of the decade, the semi-independent government agency's losses had reached a record $8.5 billion, forcing the Postal Service to consider seeking an increase in its $15 billion debt ceiling or face insolvency. Terms & Conditions. Stuck in the middle are the Postal Service’s 630,000 workers, who were assured prepaid health and retirement benefits by the 2006 Postal Accountability and Enhancement Act, known in postal circles as “PAEA” (pronounced like the Spanish rice dish). Congress and the White House still wanted some reform at the time. The U.S. Post Office. Postal Service warned Congress this week that it will completely "run out of cash" in the next several months without immediate action from the White House and Congress, but—with as many as 630,000 jobs at risk—President Donald Trump and Republican lawmakers have refused to commit to rescuing the prized government institution as it falters amid the coronavirus … The U.S. Mobile phones hastened consumer behavior changes that were already driving away the kinds of business the Postal Service had relied upon for decades. The CBO predicted the FY 2021 deficit to be $2.1 trillion. But now it’s desperate.”. Market data provided by Interactive Data. May 11, 2018 This article is more than 2 years old. Key Takeaways The current U.S. federal budget deficit is projected to be $3.3 trillion, according to the CBO. Offers may be subject to change without notice. As we have covered in recent times, the Royal Mail is currently up for sale despite a significant backlash from many Labour MPs and opposition parties. By 2009, the Government Accountability Office, Congress’s nonpartisan watchdog agency, determined that the Postal Service’s business model was no longer sustainable. Spicer proposed on Dec. 4 the city use a combination of rainy day funds — called "free cash" — and cuts to the water and sewer and school departments to cure the deficit. The loan, which has yet to be approved by the Treasury Department, gives the Postal Service enough cash to fund operations and make payroll until March or April 2021. How desperate? Postal Service. Without a $10 billion loan included in the Cares Act, the Postal Service would have had to miss a payroll or disrupt service in September. In the Omnibus Budget Reconciliation Act of 1989, the Postal Service won a hard-fought legislative battle, at some cost, to put its funding permanently off budget. Which is why, as economist Dean Baker pointed out to Congress , pretty much no … ... products and services to fund its operations. “It’s a charge we’re not going to avoid, and we’re not going to leave these workers in the lurch.”. The post office surviving — I hope that it survives at a uniformity that every American deserves. Your bank now in your Post Office It’s a free way to access your high street bank account for personal or business customers. The national debt has risen by almost $7.8 trillion during Trump’s time in office. In addition, the Office of Personnel Management (OPM) is pursuing a change in rules that would allow it to use postal-specific assumptions in its liability estimates. This burden applies to no other federal agency or private corporation. But it is more debt the agency has to carry. All rights reserved. At the end of June, the agency projects volume to be down 50 percent, and it could lose $23 billion over the next 18 months. For the first time last year, it defaulted on its annual payment. The Postal Service has racked up $160.9 billion in debt from what’s owed prepaying retiree benefits. "Trump threatened to veto the $2.2 trillion Coronavirus Aid, Relief, and Economic Security, or CARES, Act if the legislation contained any money directed to bail out the postal agency, according to a senior Trump administration official and congressional official," the Post reported. Not even two decades later, it can’t. So how come we're no longer talking about a "debt and deficit … Bill payment moved online. But the 2006 law also shifted the burden of paying for worker and retiree benefits entirely to the Postal Service. At the end of 2019, the GAO calculated that the Postal Service had $160.9 billion in debt, $119.3 billion of which came from retiree benefits. Then came the Great Recession, which ravaged the Postal Service by slicing the volume of first-class mail it handled — the items on which it makes the highest margin — by 13 billion items over two years. Of course, the relatively stable financial footing that enabled that perspective didn’t last. The mandate to prepay employees’ retirement and health-care benefits is an obligation held by few other government agencies, let alone private companies. Postal System have become a point of contention on Capitol Hill. In 2006, Congress passed a law that imposed extraordinary costs on the U.S. The Congressional Budget Office (CBO) projects that this deficit for 2020 will be 16% of U.S. gross domestic product (GDP), which is the largest it's been since 1945. Similar to the last several years, the Postal Service was unable to make any of the payments that were due to the federal government at the end of the fiscal year, which amounted to approximately $6.9 billion in 2017, to pre-fund pension and health benefits for postal retirees. It found that the federal budget deficit is exploding, thanks mostly to the 2017 tax cut, but also due to the 2018 spending bill adopted earlier this year. Simply put, because they can’t. Here’s why some store shelves are empty anyway. Postal Service, which has been losing customers for almost a decade, is still struggling to right itself. 2020 Democratic presidential nominee Joe Biden on June 23 claimed that President Trump "wants to cut off money for the post office so they cannot … The legislation passed with broad bipartisan support. The U.S. Postal Service reported Thursday a fiscal 2019 net loss that more than doubled $8.81 billion, from $3.91 billion a year ago.