The U.S. Postal Service, confronting a bleak financial shortfall that had threatened to starve it of the cash to keep operating within months, has shored up its finances enough to avoid insolvency for at least “several years,” postal regulators said on Thursday.
Robert G. Taub, the vice chairman of the Postal Regulatory Commission, told lawmakers on the House panel overseeing the Postal Service that an April decision to allow the service to temporarily suspend some payments to a retirement fund “fundamentally alters the Postal Service’s pronouncements that it could be out of cash in less than a year.”
The “action offers some breathing room,” Mr. Taub added during testimony before the Oversight Subcommittee on Government Operations, and staves off “the stated crisis of stopping mail delivery” for “at least another several years.”
In March, the postmaster general, David Steiner, had told the same panel that the Postal Service could be out of cash in under a year. But the suspension of some retirement payments since then has been estimated to free up about $2.5 billion this fiscal year alone. Postal officials have said their retirement fund is much better funded than those of other agencies and that the pause poses no immediate risk to retirees. The letter carriers union supported the decision.
But stabilizing the financial outlook still comes at a cost. The service has raised prices and slowed delivery standards in recent years as it struggles to stanch declining mail volume and rising structural costs.
At the hearing, it was clear that any kind of agreement on a long-term solution to the Postal Service’s woes remained out of reach, and stark divides emerged between the agency and its regulators on the best path to an overhaul.
The regulators at the hearing pushed back on the service’s proposed changes, including increasing the price of a first-class stamp to as high as $1 from 78 cents today. They contended that pushing prices too high would further erode mail volume, possibly worsening the fiscal shortfall rather than helping to solve it.
“The commission cannot simply allow the Postal Service to price its way out of structural deficit without seriously eroding the very mail volumes that still fund the universal service,” said Ann C. Fisher, a commissioner on the oversight board.
The regulatory commission must review price increases, and in April it agreed to an approximately 5 percent increase to first-class stamps starting July 12, which will bring the price up to 82 cents.
Major divisions also emerged over whether the Postal Service has too little supervision or too much. Mr. Taub criticized the service’s suggestion that Congress should roll back regulations on the independent agency, derisively describing it as “give us more money with less oversight.”
The Postal Service, by contrast, has maintained that its regulatory burden adds to its costs. In an April interview with The New York Times, Mr. Steiner denounced the Postal Regulatory Commission, which oversees and regulates the Postal Service, and in testimony to Congress he has characterized it as an “anchor” weighing the service down.
Ashley E. Poling, another commissioner on the oversight board, said at the hearing on Thursday that the Postal Service’s pattern of increasing prices and slowing down service in the past five years argued for more supervision.
“It is likely time for Congress to consider authorizing additional oversight to ensure the Postal Service meets its statutory obligations to the American people,” she said.
Mr. Taub said that the deferral of the cash crunch would allow everyone more time to deliberate on the best path forward.
“This is not a panacea nor a permanent or long-term fix to the Postal Service’s problems,” he said, “but it does allow Congress an opportunity to enact thoughtful and fundamental change, as opposed to choices of desperation.”
