by Ted Keating at FederalTimes.com

The U.S. Postal Service faces big problems. It could lose as much as $7 billion this year and even more in years to come.

The migration of mail to the Internet and the recession-created pullback of mail by advertisers and businesses have undermined the financial stability of a postal system that for 240 years has delivered the nation’s mail in snow, rain and dark of night. Experts predict that some mail volume will return as the economy improves, but not all. It’s clear that Congress must intervene and help the Postal Service change its ways to survive and operate as a self-funded part-government, part-commercial enterprise, without reliance on taxpayer dollars.

It’s not only the future of mail that is at stake. It’s also the $1.2 trillion-a-year mailing industry that’s responsible for 8.3 million jobs and nearly 9 percent of the nation’s GDP.

Think of saving the Postal Service as fighting an electrical fire. Putting out the blaze must always precede replacing the wiring that started the inferno. Congress should first address what foremost has set the Postal Service ablaze: the crippling $55 billion in payments Congress has required the Postal Service to make through 2016 for its future retiree health benefits.

While benefit pre-funding wisely assures that assets will be available to satisfy obligations down the road, no other federal or private-sector enterprise is required or committed to retiree health benefit pre-funding on so aggressive a schedule. This requirement is particularly burdensome during a recession. In fact, were it not for the nearly $8 billion in current and future retiree health payments the Postal Service will make once again this year, the agency would likely remain in the black.

More importantly, more than enough money — billions of dollars already paid by postal ratepayers, not taxpayers — exists to pay off the Postal Service’s entire retiree health obligation for years to come. Although that sounds too good to be true, that’s what the Office of Inspector General of the Postal Service found in a recent report to Congress.

A whopping $75 billion pension overcharge imposed on the Postal Service by another arm of the government, the Office of Personnel Management, has been a smoldering cause of the postal fire. Congress and the White House twice before have corrected OPM postal pension miscalculations, but not as fully as responsible actuarial practices would require.

What to do? Most immediately, Congress should substantially correct the postal pension overcharge and responsibly credit the overpaid pension funds back to the Postal Service for payment of its future retiree health benefit obligations. That will put out the Postal Service’s financial fire.

Then Congress should do what needs to be done to update the wiring and the design of the Postal Service’s business model. This will involve finding new ways to increase revenues and cut costs. But reducing delivery days immediately, when other steps are available, will only degrade the value of mail for households and the mailing industry, which use and rely upon the Postal Service.

Reducing mail delivery days should be the last resort, not the first.