The U.S. Post Office has no shortage of problems. As my colleague Carrie Lukas put it:

The simple fact is that the Post Office, which enjoys a government monopoly for regular mail delivery, has long stopped making sense. Policymakers' discussions about the post office's future have long seemed to revolve around what to do for the more than half million postal workers, than what actually makes sense in terms of the entity's actual utility.

Things are getting worse, not better. As the Wall Street Journal reports:

While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency's money problems are only growing worse.

The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn't likely, as the House prepares to leave for its August recess.

The agency said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer.

The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then.

Most everyone agrees the Postal Service needs an overhaul. It had a loss of $3.2 billion in the second quarter of this fiscal year; it is to report third-quarter results on Aug. 9. The agency blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees. But while the Senate has passed legislation to overhaul the agency, the House says it doesn't expect to take up its own proposal until after August.

Rather than an overhaul, maybe it’s time to put the USPS out to pasture. Pay existing employees fair-market severance and early retirement packages, and continue to make good on retirement and benefits owed to former employees. Such an arrangement would be a better value to taxpayers than keeping an expiring monopoly on life support indefinitely. Closing the USPS would also pave the way for existing as well as new providers.