<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Kirsten Salyer</p> <p>The U.S. Postal Service faces default today for the first time in its history, marking an unnecessary low point in a slow decline.</p> <p>The service has been warning that it wouldn’t make a required $5.5 billion payment due today to the U.S. Treasury to cover future retirees’ health care, Bloomberg News <a href="http://www.bloomberg.com/news/2012-07-31/postal-service-to-miss-5-5-billion-payment-to-u-s-treasury.html">reports</a>. The USPS has argued that its obligation to cover retirees is preventing the agency from becoming financially viable.</p> <p>The agency, which has lost $25 billion since 2007, faces a cash shortage of $100 million this October, and possibly $1.2 billion next year, the New York Times <a href="http://www.nytimes.com/2012/08/01/us/politics/postal-service-default-may-be-followed-by-deeper-woes.html?pagewanted=all">reports</a>. Total mail volume <a href="http://www.bloomberg.com/news/2011-08-03/u-s-postal-service-needs-fewer-workers-to-keep-delivering-the-mail-view.html">fell</a> by 20 percent between 2006 and 2010, with the most profitable mail, first-class mail, experiencing the biggest drop-off. With such declines, the USPS is struggling with cutting costs -- and getting congressional approval to do so.</p> <p>A Senate bill passed April 25 to reform the service didn’t do enough to help, and the House hasn’t done anything. As Bloomberg View editors <a href="http://www.bloomberg.com/news/2012-05-01/collapsing-u-s-postal-service-needs-freedom-to-cut-costs.html">wrote</a> on May 1, the Senate bill got a few things right: trimming the workforce by 100,000 and allowing the service to offer retirement incentives, raise postal rates, ship wine and beer, and sell things like fishing licenses.</p> <p>But the Senate prevented further cost-cutting  by forbidding the elimination of Saturday delivery for two years and by making it difficult for the service to close mail-processing plants and local post offices that are no longer needed. If the agency isn't freed from congressional control, as Peter Orszag <a href="http://www.bloomberg.com/news/2012-07-24/best-fix-for-postal-service-is-to-take-it-private.html">argues</a>, the USPS needs more flexibility to cut spending.</p> <p>The slow ruin of one of America’s oldest agencies is a sad sight.</p> <p>(Kirsten Salyer is the social media editor for Bloomberg View. <a href="https://twitter.com/kirstensalyer">Follow her</a> on Twitter.)</p> <p>Read more breaking commentary from Bloomberg View columnists and editors at <a href="http://www.bloomberg.com/view/the-ticker/">the Ticker</a>.</p> </body> </html>