	Background

Since 1971, the U.S. Postal Service (USPS) has been a self-supporting, wholly governmental entity. The USPS is a marketized government agency that was designed to cover its operating costs with revenues generated through the sales of postage and related products and services. The USPS's Financial Difficulties, FY2006-FY2011

		Flattening Then Declining Revenues

After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011. Were it not for congressional action to reduce a statutorily required payment to the RHBF, the USPS would have lost an additional $9.5 billion. The USPS's Financial Difficulties, FY2012

In the first three quarters of FY2012, the USPS had an operating loss of $11.5 billion, which included an $11.1 billion charge for payments due to the RHBF in FY2012. The USPS did not have sufficient cash to make a $5.5 billion payment to its Retiree Health Benefits Fund (RHBF) that was due on August 1, 2012. The USPS is unlikely to have sufficient liquidity to make a $5.6 billion RHBF payment due on September 30, 2012. The USPS will report its FY2012 year-end financial results in early November 2012. Nevertheless, a number of ideas for incremental reforms have been put forth that would improve the USPS's financial condition so that it might continue as a self-funding, government agency. Postal Service. Reducing the USPS's Retail and Nonretail Facilities

In recent years, the USPS has moved to close some of its facilities:
between 2006 and 2011, the USPS reduced the number of its area and district offices from 89 to 74; in late July 2011 USPS began an initiative to consider the closure of 3,652 retail postal facilities; and, in May 2012, the USPS announced it would close 48 mail processing facilities before September, and an additional 98 facilities between January and February 2013.
This report provides an overview of the U.S. Postal Service's (USPS's) financial condition, legislation enacted to alleviate the USPS's financial challenges, and possible issues for the 112th Congress.
Since 1971, the USPS has been a self-supporting government agency that covers its operating costs with revenues generated through the sales of postage and related products and services.
In recent years, the USPS has experienced significant financial challenges. After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011. Were it not for congressional action, the USPS would have lost an additional $9.5 billion.
In the first three quarters of FY2012, the USPS had an $11.5 billion operational loss. The USPS did not have sufficient cash to make a $5.5 billion payment to its Retiree Health Benefits Fund (RHBF) that was due on August 1, 2012. The USPS is unlikely to have sufficient liquidity to make a $5.6 billion RHBF payment due on September 30, 2012.
A number of ideas have been advanced that would attempt to improve the USPS's financial condition in the short term so that it might continue as a self-funding government agency. All of these reforms would require Congress to amend current postal law. The ideas include (1) increasing the USPS's revenues by altering postage rates and increasing its offering of nonpostal rates and services; and (2) reducing the USPS's expenses by a number of means, such as recalculating the USPS's retiree health care and pension obligations and payments, closing postal facilities, and reducing mail delivery to less than six days per week.
This report will be updated after the USPS releases its quarterly financial results in early November 2012, and in the interim should there be any significant developments.