Monday, September 5, 2011

Confusion Over If / When The Postal Service Shuts Down

The New York Times reports that:
But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.
This story reflects the confusion of conflicting statements of  CFO Joe Corbett at the May and August MTAC meetings.  In May heard the Postal Service would run out of cash in July, 2012 and have to shut down and in August he said just the opposite. 

The Postal Service has repeatedly used the words insolvency, and a recent analysis on this blog shows they will have less than $2.5 billion in cash and borrowing authority on September 30 to pay $9.1 billion in bills.  Therefore if the Treasury department demanded payment, the Postal Service would shut down in October.

For 2012. the financial picture is not much better.  The economic outlook is weak, and more than likely weaker that what drove the  forecasts presented at MTAC only a few weeks ago.   So a shutdown date in late 2012 seems possible if the Postal Service to make its payments for retiree healthcare benefits.

At the Senate hearing tomorrow, Postmaster General Pat Donohoe has to clarify the question of Postal Service shutdown.  If he does not provide that information in his testimony, Senators on the Homeland Security and Governmental Affairs must get clarification on if shutdown could occur and if it could when.

No comments: