handled represented a 1.7 percent decline from fiscal year 2010. This decline followed decreases in mail volume of 3.3 percent in fiscal year 2010, 12.7 percent in fiscal year 2009, 4.8 percent in fiscal year 2008, and 0.4 percent in fiscal year 2007.7 In total, mail volume in fiscal year 2011 was down 21 percent since its peak in fiscal year 2006 at more than 213 billion pieces.8
The Postal Service generated a total of about $65.7 billion in revenue in fiscal year 2011.9 Expenses, however, totaled about $70.6 billion, leading to nearly $5 billion in losses for the year.10 These losses followed a record $8.5 billion in losses in fiscal year 2010.11 The fiscal year 2011 losses would have more than doubled – exceeding $10 billion for the year – had Congress not delayed the due date for a statutorily-required retiree health pre-funding payment originally due on September 30, 2011 until the next fiscal year.12 Postmaster General Patrick R. Donahoe has repeatedly argued that, absent significant changes, the Postal Service will have completely exhausted its cash and borrowing authority at some point during fiscal year 2012, putting ongoing operations in jeopardy.13
In a November 21, 2011 speech at the National Press Club, Mr. Donahoe blamed statutory restrictions and obligations placed on the Postal Service for the difficult financial situation it faces despite aggressive actions to cut costs and grow new lines of business. He said at one point: ―We are in a deep financial crisis today because we have a business model that is tied to the past. We are expected to operate like a business, but we do not have the flexibility to do so.‖14
Throughout his National Press Club speech, Mr. Donahoe highlighted actions he argues that private delivery companies have taken to cut costs, but that the Postal Service is prohibited from doing, such as adjusting delivery frequency. He also cited the Postal Service‘s costly pension and retiree health obligations. He said that the Postal Service has been required to pay $11.4 billion more than it owes into the Federal Employee Retirement System (FERS) over the past 21 years.15 He also said that the Postal Service‘s $6.6 billion in total losses during fiscal years 2008 and 2009 – the two years which saw the most dramatic declines in mail volume following the recent economic slowdown – were due to the $7 billion in retiree health pre-funding payments paid out during that period