Ok, after some quick research, here's what is going on with USPS as best I can tell. In 2006, the prefunding bill was passed, which required USPS to make ten annual payments of $5.5B each to prefund the pensions for the next 75 years. They made the first few, but after the financial crisis, they were too short of cash to make the 2011 one, so they got an extension until August of this year. So, no payment in 2011, and two payments due in 2012. They were unable to make the August payment (left over from 2011) and now they're announcing that they're not going to be able to make the 2012 payment, either.

Now, here's the rub: That 2006 bill imposed a prefunding obligation of $90.3B to completely cover all the benefits. Of that total, $44.1B has already been paid as of the end of fiscal 2011 according to an Inspector General report from last June. And the formula used to calculate the pension cost wasn't set up correctly - USPS has actually paid 105% of its pension costs since the bill was enacted, resulting in a surplus of pension payments of $13.1B, according to the same IG report.

Now, about profits and losses: For the first four years after the prepayment bill was passed, the USPS would have turned a roughly $1B profit without the prepayments. Since then, however, revenues have been dropping like a stone, with a major loss (at least $5.7B, as best I can tell) for fiscal 2011 and an $11.6B loss for the first three quarters of fiscal 2012. Mail volume has dropped 3.6% this year, which is a large reason why.

So, USPS has called for several changes - an $11B refund of the pension overage, changing the product mix (to offer office supplies and the like, more like a mailbox store), five day delivery, change the prefunding requirement, and redesign the worker's comp system by having the USPS pull out of the federal plan and set up its own. The union is opposed to the worker's comp changes and going to five day delivery, but supports the other measures. The Senate has currently passed a bill to implement some of this, but the house hasn't done anything at all. There's hope that it will get taken up in the lame duck session, but with sequestration also being addressed, it's more likely to get tossed to the next congress.

Tthe overall problem is this uncomforable, half-private half-public structure. I do believe that anything the government touches turns into a bloated inefficient mess, but if you're going to require service equal in cost and extent to every person in the country regardless of costs to provide, it's already a fully social service; attempts to pretend otherwise will only cost money.

For those unaware, the USPS is required to turn a profit while at the same time required to do things that UPS, FedEx, et al say will bankrupt anyone. Things like providing a fully staffed post office, open six days per week, for every cluster of people across the US. Daily delivery to residential properties many tens of miles apart at the same cost as daily deliveries to thousands of people in a single building. And my favorite, snail mail spam paid for by the USPS because it puts money into the pockets of congressmen.

It's like requiring an Olympic sprinter to compete using a potato sack (both legs must remain within the bag), while their competitors not only don't have any such requirement, they get a 10 second head start. And they're only racing 100m.