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Cash-poor Postal Service maxes out its credit card

October 17, 2012|By David Lazarus

Many people think the U.S. Postal Service is supported by tax dollars. It isn't.

The nice folk who bring us snail mail are required by law to pay their own way in the world. They were allowed, though, to borrow cash from the U.S. Treasury, up to $15 billion.

The Postal Service hit that limit on Sept. 28, the agency says.

In other words, they've maxed out their credit card.

What that means, barring an infusion of bailout cash from Uncle Sam, is that the Postal Service will have to significantly jack up rates to survive.

The agency has been borrowing huge wads of cash in recent years as the volume of first-class mail declines. It's an email/Twitter/Facebook world now, and the Postal Service finds itself in the buggy-whip business.

The agency reported a $5.2-billion loss for the quarter ended June 30.

Right now, the Postal Service is scraping by on a surge in election-season and holiday-related junk mail. But officials have been saying for months that drastic action is required to keep the agency afloat.

It's cutting costs right and left, prodding thousands of workers to take early retirement and planning to close hundreds of facilities. Starting Jan. 27, the cost of a first-class stamp will rise by another penny to 46 cents.

That won't be enough. Expect stamp costs to rise even more, and for the distance that mail will travel to factored in, just like FedEx and UPS do. Saturday delivery? Adios.

And more money from taxpayers will have to be made available.

Otherwise, get ready to say goodbye to those red, white and blue trucks making their way up and down every street in the country.

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