The United States Postal Service is again standing on the edge of disaster with a looming Aug. 1 deadline to escape defaulting. If Congress doesn’t do something soon, said a spokesman, the USPS won’t be able to make a legally required annual $5.5 billion payment into a health-benefits fund for future retirees.
If it does default, it would be the first time ever in the USPS’ long history. Congress probably won’t come to the rescue, as the House is preparing to leave for its August recess, notes the Wall Street Journal.
The good news is that a default on the payment, which is for 2011, won’t affect services or the agency’s ability to pay employees and suppliers. Howcver, ”these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers,” said spokesman David Partenheimer.
It’s not just that one little default, either. The USPS says it will also default on the same payment for 2012, which is due on Sept. 30, if it doesn’t get help from the legislature by then.
The USPS has been struggling for awhile now, with a loss of $3.2 billion in the second quarter of this fiscal year. It blames declining mail volumes and the 2006 congressional mandate that it set aside those billions of dollars for retirees every year. The Senate passed legislation to overhaul the agency, but the House likely won’t do anything similar until after August.
The Senate voted in April for legislation that would return around $10.9 billion that was overpaid into the federal employee pension system and limit the USPS’s ability to close branches and stop Saturday delivery.
Meanwhile in the House, Republican leaders support legislation that they claim would have the USPS operating more like a business. That legislation will likely not have a vote before the August recess, said one backer of the bill.
Post Office Might Miss Retirees’ Payment [Wall Street Journal]