ANNOUNCED AS TEMPORARYNo
Capital injection and equity stakes (including bailouts)
A bill approved in the House of Representatives and pending in the Senate would provide, through a somewhat indirect route, a substantial bailout to the United States Postal Service (USPS). The USPS is an independent establishment of the executive branch of the Government of the United States.
The USPS ran a $2.8 billion deficit in Fiscal Year 2008, according to the service's most recent financial report, and by one account it 'is facing even larger losses this year due to a sharp decline in mail volume in the weak economy.''1' Postal services around the world are under stress, with The Economist noting that the recession 'has tipped the industry into full-scale crisis' as firms 'have slashed direct-mail advertising budgets and embraced substitution as a way to reduce costs.''2'
The House of Representatives responded to the USPS budget crisis on September 16, 2009 by approving on a vote of 388-32 the 'United States Postal Service Financial Relief Act of 2009' (designated as H.R.22). This very brief bill would reduce the amount that the USPS is required to pay into the Postal Service Retiree Health Benefits Fund by the end of fiscal year 2009. According to one news report,'3' this provision means that the USPS 'which now faces a liability of $5.4 billion due Sept. 30, would have to pay only $1.4 billion and would be allowed to effectively defer the remaining $4 billion until after 2017.' The account further noted that 'the $4 billion will now be added as a potential cost on the government's books given the fragile state of the Postal Service, and the whole handling of the issue is seen by many as a parliamentary sleight-of-hand.'
The Congressional Budget Office took a more benign view of the legislation, concluding in its cost estimate for the bill that 'enacting the legislation would result in on-budget costs of $2.8 billion and off-budget savings of $2.8 billion over the 2009-2019 period.'
The bill has been referred to the Senate, which has not yet taken action on it.
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