WASHINGTON (CNNMoney) — The head of the U.S. Postal Service said Tuesday that if the service doesn’t cut costs and Congress fails to act, it’s going to be in the same dire straits as Greece.
He said that Greece’s ratio of debt compared to gross domestic product is 1.61 and the U.S. Postal Service’s ratio of debt compared to revenue is 1.51.
Donahoe clarified later that he was sincere in the comparison, except he didn’t think the U.S. Postal Service is on the verge of default or a bailout.
“But, it’s true,” said Donahoe, speaking with reporters at a postal policy forum called Postal Vision 2020. “Unfortunately, if we don’t do something we will look like that.”
He added that the U.S. Postal Service’s cost-cutting plan, and legislation passed by the House and Senate, would prevent the Postal Service from having “to go down that path.”
Last month, the Postal Service announced plans averting closures of rural post offices and delaying consolidations on postal plants. Only 48 plants are to be closed or consolidated in July and August. Other consolidations happen in 2013 and 2014 — and could be trumped by Congress.
The Postal Service reported a $5.1 billion loss last year, citing the recession, declining mail volume and a congressional mandate to prefund retirement health care benefits.
The health care mandate is a major liability for the Postal Service. Officials have said they won’t have the cash to make a $5.5 billion payment that’s due Aug. 1, nor the $5.6 billion payment due Sept. 30.