WASHINGTON (Reuters) - The U.S. Postal Service could be on its way to a taxpayer bailout unless it takes extreme steps to become financially viable, according to a congressional report released on Monday.
The Government Accountability Office (GAO) said the postal service faces “daunting financial losses” of more than $238 billion over the next decade.
The GAO said Congress should form a panel of independent experts to make recommendations that could include removing the requirement that mail be delivered within six days, reducing USPS’ operations, and allowing it to do business in new, non-mail-related areas.
“If no action is taken, the risk of USPS’s insolvency and the need for a bailout by taxpayers and the U.S. Treasury increases,” the GAO said.
The USPS in February reported a loss of $297 million for the first quarter of its fiscal year, blaming the recession and the use of electronic mail. The USPS, which delivers nearly half of the world’s mail, has posted net losses since 2007.
In addition to the erosion of its business due to email, the service also faces competition from FedEx and United Parcel Service.
Last month, the postal service moved forward with its proposal to cut costs by ending Saturday mail delivery. Such a proposal would eventually have to be approved by Congress.
The GAO, however, warned that simply cutting costs will not fully resolve the postal service’s financial problems and that Congress needs to address legal restrictions.
The GAO said Congress should consider providing financial relief, including modifying its retiree health benefit obligations and revising the law on collective bargaining with its workers, to ensure that binding arbitration takes its financial condition into account.
The postal service said in a letter to the GAO that it largely agrees with the report, but it is concerned about calls for a panel of independent experts to make recommendations.
It said such a panel could add a layer of bureaucracy and delay needed reforms.
“Our challenged are urgent and well documented. It is time to act,” the USPS said.
Reporting by Karey Wutkowski; Editing by Tim Dobbyn