Congress Tackles Postal Reform

by InvestorPlace Staff | April 16, 2012 6:19 pm

[1]After a lot of time spent discussing the dire straits the U.S. Postal Service is in, Congress looks poised to toss the post office a life line[2].

Any attempts to close the huge deficits the postal service has run in recent years are bound to be painful, though. With losses surpassing $5.1 billion last year, there’s a lot of red ink to clean up. Congress is also in a bit of a no-win situation. If they do nothing to alleviate the deficit by May 15, the day that a moratorium on closing postal facilities expires, the current Postmaster General has stated he will close 223 postal plants.

Still, any solution Congress comes up with will likely involve some facilities closing. In addition, they hope to buy out some employees’ contracts, cut worker compensation benefits, and end Saturday service in two years’ time. A bill that passed a Senate committee in November would also allow the post office to join competitors like FedEx (NYSE:FDX[3]) and UPS (NYSE:UPS[4]) in shipping beer, wine, and liquor through the mail. Tens of thousands of jobs would likely be cut in the process.

Of course, postal unions are staunchly opposed to these attempts to eliminate facilities and jobs. The chief of The National Association of Letter Carriers has said proposed bills would “dismantle” the postal service. However, Sen. Tom Carper, D-Del., was right when he said this:

“If Congress wants to require the Postal Service to maintain additional mail-processing facilities, we have to figure out a way to reduce costs elsewhere or raise revenues.”

In this economic landscape, painful cuts seem to be the only solution available.

— Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

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