On the plus side, the mail agency reported that its fast-growing shipping services, which include express and priority mail, grew by 9 percent, helping to offset much of the declining revenue from first-class mail. Donahoe said package volume also is expected to jump by 20 percent this holiday season compared to the same period last year, boosted by increased consumer purchases on e-Bay, Amazon.com and other Internet shopping sites.
Joseph Corbett, chief financial officer for the Postal Service, said the mail agency expects to operate for the first half of next year with about four days of cash reserves, a low amount which he described as unheard of for any well-run business. Cash levels dipped perilously close to zero last month before bouncing higher due to a surge in election-related mail. In all, campaign mailings and mail-in ballots helped bring in $500 million, a new high and roughly double the amount in the 2008 election year.
"We are far short of liquidity," Corbett said.
Fredric Rolando, president of the National Association of Letter Carriers, blamed Congress for mandating the annual health prepayments in 2006, which have contributed significantly to the Postal Service's financial woes. But he suggested that lawmakers might be wiser to act on legislation next year, rather than acting too hastily. His union is opposed to the current version of the House bill, which gives the Postal Service wide leeway to close post offices and make employee cuts to balance its budget.
"Rather than rushing through a flawed bill in a lame-duck session, the new Congress should start over in January and develop constructive legislation that fixes pre-funding. That would eliminate the biggest drain on postal finances," Rolando said.
Last month, the post office said it will increase postage rates on Jan. 27, including a 1-cent increase in the cost of first-class mail, to 46 cents. The rate increase, which is tied to the rate of overall inflation, will make only a small dent in financial losses.
The Postal Service also originally sought to close low-revenue post offices in rural areas to save money, but after public opposition, it is now moving forward with a new plan to keep 13,000 of them open with shorter operating hours.
Without legislative changes, it said, annual losses will exceed $21 billion by 2016.
"If Congress fails to act, there could be postal slowdowns or shutdowns that would have catastrophic consequences for the 8 million private sector workers whose jobs depend on the mail," said Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group representing the private sector mailing industry.