U.S. Postal Service warns it could run out of money by October

Author: AIMEE PICCHI, CBS MoneyWatch
United States Postal Service (CBS)

The U.S. Postal Service is warning that it could run out of cash by October due to a “devastating” drop in business caused by theĀ coronavirus pandemic.

In video testimony to members of the House Oversight and Reform Committee, Postmaster General Megan Brennan said Thursday that the USPS could run out of cash this fiscal year, which ends in September, according to aĀ statementĀ from the panel. The postal agency forecasts that it could see a $13 billion drop in revenue.

Brennan said the drop in mail volumes during the coronavirus outbreak “is steep and may never fully recover,” according to a separate statement issued by the USPS. The financial crunch threatens the Postal Service’s ability to operate, she added.

The warning comes after lawmakers earlier this month flagged the financial stress facing the postal agency, saying itĀ may not survive the summerĀ without immediate aid from Congress or the White House.

“The Postal Service relies on the sale of postal products and services to fund our operations, and these sales are plummeting as a result of the pandemic,” Brennan said in the statement issued by the USPS.

Brennan said the postal agency expects the pandemic will increase its net operating loss by more than $22 billion over the next 18 months, and by $54 billion “over the longer term, threatening our ability to operate.”

The USPS, a quasi-governmental agency that relies on fees rather than taxes, has 630,000 workers, with millions of Americans relying on it to deliver everything from personal letters to medicine. The agency delivered more than a billionĀ shipmentsĀ of prescription drugs last year. Ending operations during the virus outbreak could have dire consequences for the health of people around the country, lawmakers warned earlier this month.

The bipartisan Postal Service Board of Governors, which was appointed by President Donald Trump, is asking Congress for aid. That includes $25 billion in emergency appropriations to offset losses due to the pandemic and a $25 billion grant to fund modernization projects at the Postal Service, lawmakers said Thursday. The board also is asking for $25 billion in unrestricted borrowing from the Treasury Department.

“As Americans are urged to stay home, the importance of the mail will only grow as people, including those in rural areas and senior citizens, will need access to vital communications, essential packages and other necessities,” Brennan said in the statement.

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