by Jerry Robinson, FTMDaily.com Editor-in-Chief
The U.S. Federal government is notorious for interfering with the free market and making bad economic situations even worse. Thanks to the alphabet soup of agencies that have been created over the last several decades, the Feds have gotten their hands on nearly every detail of our lives. However, one of the few agencies that exists today that was explicitly authorized (and actually mandated) by the U.S. Constitution is the United States Postal Service (USPS). Officially formed in July 1775, the USPS now employs 574,000 employees and operates the largest fleet of vehicles on the planet (over 218,000).
Like most government agencies, the USPS is facing seismic financial troubles. For over a year, the Postal Service has been requesting support from the Congressional lawmakers. This week, it is becoming clear that the world’s largest mail carrier is preparing for its first default in its 237 year history.
At issue is a required annual $5.5 billion payment into a health benefits fund for future postal service retirees. The payment is due August 1 and the USPS is making it clear that it does not have the funds to pay it.
Another $5.5 billion for fiscal year 2012 is due again on September 30. The USPS says it will not be able to make that payment either.
The USPS is bleeding — losing $3.2 billion in the second quarter of fiscal year 2012 — and its problems require immediate Congressional action. The Post Office is in an interesting situation as it receives no direct taxpayer funding and yet it is faced with massive amounts of Congressional interference. It should be unleashed from the government’s inept management and be allowed to operate more like a free enterprise.
Congress will recess in August and it is becoming more doubtful that they will intervene in a meaningful way prior to the August 1 payment deadline. If not, expect the first USPS default to occur… followed by a large amount of political finger pointing afterwards.