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Postal Service reaches borrowing limit, risks running out of cash

Oct. 17, 2012 - 01:46PM   |  
By SEAN REILLY   |   Comments
(Getty Images)

The U.S. Postal Service has hit its $15 billion borrowing limit with the U.S. Treasury, adding to the financial pressures on the struggling mail carrier.

“It’s a serious concern,” USPS spokesman Dave Partenheimer said Wednesday. Currently, however, the agency — which has been buoyed by a recent flood of election-year mailings — is managing its cash to ensure that workers and suppliers are paid, he said.

Although the agency had to make a $1.4 billion payment for workers’ compensation Monday, no particular factor contributed to its decision to max out the $15 billion line of credit late last month, Partenheimer said.

“It was a cash management decision made based on our liquidity issues,” he said. That decision, which USPS officials had previously not disclosed, was first reported by The Wall Street Journal on Tuesday.

The Postal Service “is now walking a tight rope with no net,” Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a organization of mailing industry suppliers, said in a statement. “The longer Congress waits to enact postal reform, the more difficult and more expensive the solutions become.”

Partenheimer reiterated a call for Congress to approve legislation to restore the Postal Service to long-term financial stability. A bill passed by the Senate in April would let the Postal Service tap an estimated $11.4 billion surplus with the Federal Employees Retirement System for employee buyouts and other purposes. The House has not acted on either that measure or a competing bill by Rep. Darrell Issa, R-Calif., that would give a specially appointed board authority for putting the Postal Service back in the black.

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