Growls

“Going concern” is an accounting term that “refers to a company's ability to continue functioning as a business entity (concern being an early-20th century term for "business" or "enterprise"), according to Wikipedia.

In April 2010, the U.S. General Accounting Office testified (requires Adobe) before the House of Representatives’ Committee on Oversight and Government Reform:

“USPS is facing a major financial crisis. Mail volume, the primary source of USPS revenues, declined by 36 billion pieces (about 17 percent) over the last three fiscal years (2007 through 2009). Mail volume declines were largely due to the economic downturn and changing use of the mail linked to the continuing shift to electronic communications and payments. USPS’s financial outlook is poor as it projects future declines in mail volumes, stagnating revenues, large financial losses, increasing debt, and significant financial obligations, including for retiree health benefits. USPS projects a record loss of over $7 billion in fiscal year 2010. Furthermore, USPS expects to borrow $3 billion, bringing its total outstanding debt to $13.2 billion, close to its $15 billion statutory borrowing limit with the U.S. Treasury.  Looking forward, USPS projects that by fiscal year 2020, total mail volume will further decline by 15 percent, to the lowest level since 1986. Absent additional actions to cut costs and increase revenues, USPS expects financial losses will escalate over the next decade.”

Now comes the New York Times, which tomorrow will report the “Postal Service struggles to stay solvent, and relevant.” In addition, the paper says “the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.” The article, written by Steven Greenhouse,” adds:

“At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

“Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. 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.

“The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the agency’s predicament on Tuesday. So far, feuding Democrats and Republicans in Congress, still smarting from the brawl over the federal debt ceiling, have failed to agree on any solutions. It doesn’t help that many of the options for saving the postal service are politically unpalatable.”

Although the Postal Service may not be a going concern in the long run, there are ways to modernize postal operations in  the short term, it seems. Reuters reported on Thursay:

“The Postal Service plans to unveil on Sept. 15 a plan it says would save up to $3 billion per year by "dramatically decreasing the network of processing facilities and adjusting service standards."

“A report by the Postal Service's inspector general in August determined that relaxing First Class Mail standards from guaranteeing delivery in 1-3 days to 2-4 days could reduce premium pay for overnight workers and trim processing costs.”

It seems Congressional leadership is only capable of acting when the clock is ready to strike midnight.

UPDATE (9/6/11): At the end of a post about the Postal Service's fiscal crisis at American Interest, Walter Russell Mead observes:

"Given its immense health care expenditures, the absurd amount of waste it generates, and the declining public interest in using the expensive snail mail system, the USPS’s fiscal problems come as no surprise.

"Advice for postal system users: make sure your email account works.  For postal workers: brush up on your skills.  The financial crisis of the USPS isn’t going away anytime soon, and a lot of jobs are going to disappear."