Facing a second year of losses totaling $8 billion or more, the U.S Postal Service wants to pull its workers out of the retirement and health benefits plans covering federal workers and set up its own benefit systems. The agency also is considering cutting as many as 120,000 jobs.
U.S. Postal Service seeks to pull employees from federal health plans
Congressional approval would be needed for either step, and both could be expected to face severe opposition from postal unions, which have contracts that ban layoffs.
The post office has cut 110,000 jobs over the last four years and is currently engaged in eliminating 7,500 administrative staff. In its 2010 annual report, the agency said it had 583,908 career employees.
Postal officials have said they will be unable to make a $5.5 billion payment to cover future employee health care costs due Sept. 30. It is the only federal agency required to make such a payment but, because of the complex way government finances are counted, eliminating it would make the federal budget deficit appear $5.5 billion larger.
If Congress doesn't act and current losses continue, the post office will be unable to make that payment at the end of September because it will have reached its borrowing limit and simply won't have the cash to do so, the agency said earlier.
The latest cutback plans were first reported by the Washington Post, which said a notice to postal service employees informing them of the agency's proposals stated: "Financial crisis calls for significant actions, we will be insolvent next month due to significant declines in mail volume and retiree health benefit prefunding costs imposed by Congress."
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