Post Office Set for Historic Default

By Newsroom America Staff at 19 Jul 2012

(Newsroom America) -- The U.S. Postal Service has warned once more that, sans congressional action, it will default on a legally required annual $5.5 billion payment to a health-benefits fund for future retirees.

What's worse, analysts said, Congress is preparing to leave Washington, D.C., for summer vacation, so any action on what would be the long-serving agency's first default isn't likely.

Postal officials said a default on the payment for 2011 wouldn't directly affect service or its ability to pay employees, The Wall Street Journal reported Thursday.

However, "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer.

The agency said it will default on its 2012 payment, due Sept. 30 and which is roughly the same amount, if lawmakers fail to act.

Most lawmakers agree the Postal Service needs overhauled, the paper said. The agency lost $3.2 billion in the second quarter of the current fiscal year, which ends Sept. 30, and third-quarter results, which are to be reported by Aug. 9, aren't expected to be any better.

The Senate has passed legislation overhauling the agency, but the House has said it won't take up the issue until after the August recess.

The sides are far apart. The bipartisan Senate bill would restore the agency's finances by returning a $10.9 billion overpayment made into the federal employee pension system.

Republican leaders in the House, however, want the agency to be operated more like a business, and part of that plan includes closing thousands of small, rural Post Offices that don't get much use. Rural-state lawmakers have largely opposed that plan, however.

The government is constitutionally required to establish and operate a Postal Service.

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