Editor's Note : USPS in a Pickle Again

April 2009 By Hallie Mummert

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Two years after headline-making postal reform, here we go again. The U.S. Postal Service witnessed a headline-making drop of 9.5 billion mail pieces in fiscal year 2008, which contributed to a net loss of $2.8 billion. But having to pay $5.6 billion to prefund its retiree health benefit fund was the major hit that made the USPS management’s aggressive cuts of $2 billion from annual operating costs practically disappear into thin air. And with no relief in sight, Postmaster General John Potter has stated the organization is on track to post a revenue shortfall of $5 billion in fiscal year 2009.

Obviously, the economy is a big driver behind the slowdown in First Class and Standard mail volume, but it is not the sole reason the USPS is on the ropes again. As companies diversify their media mixes, more of their marketing contact occurs outside of the postal channel. So the slow restoration of the country’s economic health likely will not return mail volumes to pre-recession levels. And with every hike in postage, more companies find the mail channel too expensive for some of their marketing and communications activity.

Does the USPS have another $5 billion to trim from operations? Potter and his team are planning on $5.9 billion in budget cuts for the next two years. But after the retirement health fund prepayments, it still puts the organization in the red.

With GM taking $13.4 billion in bailout money (and now asking for an additional $16.6 billion to stay afloat), Bank of America getting $45 billion and Wells Fargo with $25 billion, then a $12 billion cushion that doesn’t even come out of taxpayers’ pockets sounds like a no-brainer.

Thanks to Rep. John McHugh (R-NY) and Rep. Danny Davis (D-IL), legislation has been introduced in the House of Representatives that would provide the USPS with a two-year suspension of the retiree health benefits prepayment. I urge you to contact your representative and ask that he or she co-sponsor this bill (visit http://tinyurl.com/c3yzhf, where Target Marketing has assembled the message and links to help you reach the House quickly).

Two years’ relief might not be enough to fix the USPS’ long-term fiscal challenges, but it buys everyone time when it’s most desperately needed.

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