Another bailout on the way - Postal Service next in line

It won't be a large amount - comparatively speaking. It will be hundreds of millions instead of billions.

But that doesn't alter the fact that we have to figure out what to do about mail delivery in the 21st century. Needless to say, much of the shortfall for the Postal Service is in paying out massive pensions and health care benefits to their retirees - sort of a mini-GM without the kewl cars. Private industry pensions are also in trouble, and that problem may also end up at Congress's doorstep thanks to ERISA.

But if they are going to tap the government in order to stay afloat, they darn well better keep Saturday mail delivery and decent office hours for the public. CNN Money:

The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.

The USPS, a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier.

The agency has been suffering from an ongoing decline in mail volume, which has undercut revenues, while retiree health care costs have been straining its reserves.

Excluding costs related to retiree benefits and adjustments to workers' compensation liability, the Postal Service said it had net income was $226 million in the first quarter, which ended Dec. 31.

Despite ongoing cost-cutting efforts, the USPS said it expects to have a cash shortfall this year and to hit its federally mandated borrowing limit by September, when the government's fiscal year ends.

It would be hard to privatize an agency that has little hope of making money. It used to be that second and third class mail subsidized first class mail. But the precipitous decline in business mailings - the result of better targeting of consumers as well as email - means that the Post Office will be bleeding cash for the foreseeable future.

After the snow last week and bitter cold this week, I don't begrudge the carriers one cent of their pay. But the fact is, mail has become less and less important as so much communication is now done online for free. Eventually, some kind of privatization will have to be worked out. Until then, looks like taxpayers will be on the hook for keeping the Post Office afloat.

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