WASHINGTON (CNN) – The U.S. Postal Service is facing a financial crisis and is losing millions of dollars a day.
The ailing organization is begging for congressional help to get back on track.
The dire situation is something the Postmaster General acknowledged on Capitol Hill this Spring.
“We’ve got to get our finances stabilized. The quicker we act and get ourselves back on firm financial footing, the better for the industry,” said U.S. Postmaster General Patrick Donahoe.
If Congress does not act by Aug. 1, the service will default on a $5.5 billion payment to the federal government to cover retiree health benefits. It would be the first default in its more than 200-year history.
“The postal service has said they’re going to continue to pay its employees and they’re going to continue to pay their bills and pay their subcontractors. So in some respects this default is largely symbolic,” said CNNMoney.com’s Jennifer Liberto.
However, Liberto points out that the postal service has to make a second payment in September. If they were unable to make that payment, the organization would eventually run out of cash to meet its basic needs.
Losses from a sluggish economy and the growing number of people paying their bills online have forced the service to tap a nearly $13 billion treasury department loan to make ends meet. The service has a plan to cut costs by $22.5 billion by 2016 and return the service to profitability.
The organization is already shutting down some processing plants and has offered retirement packages to thousands of employees. Plus, the post office is also cutting hours at some post offices and wants to end Saturday service.
Unions want to reduce the money set aside for health benefits and do not want to see services cut.
“I think there’s gotta be some closings and consolidation. That is modernization. It just doesn’t need to be as draconian and as quickly done (as is what is necessary right now),” said the American Postal Workers Union’s Cliff Guffey.
The Senate has passed legislation to help shore up the service’s finances, but the house has yet to act, despite Donahue’s warning about what will happen by October of 2013 without help.
If and when Congress acts, consumers can expect to see changes. The Senate bill would eventually allow the Postal Service to end Saturday delivery after two years of study, while the House bill would let them do so right away.