U.S. Postmaster General David Steiner told Congress on Wednesday that the financially struggling agency has a broken business model and needs help from lawmakers to turn around its operations.
"The bottom line is that we are out of cash. We are borrowing from our employees’ retirement funds to continue operations," Steiner's written testimony before a U.S. Senate committee said, warning it could run out of operating funds in months if it stopped deferring obligations. "The Postal Service has a broken business model and action is needed by Congress to fix it."
Steiner wants Congress to compensate it for money-losing operations and make other reforms. In March, Steiner said the Postal Service was hiring restructuring advisers to help address its financial troubles.
One key question is whether USPS should continue to deliver to 170 million addresses six days a week, which costs $3.4 billion annually -- and 70% of those routes lose money, Steiner said. About 58% of its 18,000 Post Offices also lose money.
The Postal Service has reported net losses of about $120 billion since 2007, as first-class mail, its most profitable product, has fallen sharply with the shift to digital communication even as the agency must maintain costly nationwide delivery operations.
USPS said last month it was suspending non-essential spending on travel, office supplies and consultants. Steiner told officers in a memo the moves were "to protect core operations and ensure we can continue meeting all essential obligations."
Last month, the Postal Service said it would temporarily suspend employer payments for a federal pension program and plans to raise the price of first-class mail stamps to 82 cents from 78 cents, effective July 12.
Suspending employee pension contributions will conserve $2.5 billion through September 30 and potentially $15 billion through 2030.
