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U.S. Postal Service Will Likely Default

via Sean Reilly, Federal Times, USA Today

The cash-strapped U.S. Postal Service is within weeks of defaulting on a legally required $5.5 billion payment into a health benefits fund for future retirees.

So far, it appears House leaders have no intention of preventing that from happening — they have postponed any action on relief measures until at least fall.

While a Senate-passed bill would significantly reduce the amount of the payment, the House has not acted on that legislation. House leaders also have reversed plans to take up a rival measure that would cut the payment to $1 billion, according to a spokesman for one of the measure’s sponsors, Rep. Dennis Ross, R-Fla.

“It appears, although we have the votes, leadership does not intend for postal reform to come to the floor before (the) August recess,” the spokesman, Fred Piccolo, said in an email late Wednesday.

Under a schedule laid out in the 2006 Postal Accountability and Enhancement Act, the Postal Service also is supposed to make a $5.6 billion payment into the retiree health fund at the end of September.

“Without congressional action, we will default on both payments,” Postal Service spokesman Dave Partenheimer said in an email Thursday.

Lawmakers appear likely to let the Postal Service default, representatives of mailing industry groups said Thursday.

“They’ll let them default,” said Gene Del Polito, president of the Association for Postal Commerce. “What time is there left to do anything?”

While a default would be embarrassing for the Postal Service, the practical consequences, if any, are unclear.

“We will continue to pay employees and suppliers to keep the mail moving,” Partenheimer said. Current retirees’ benefits would not be affected.

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  1. Pingback: Historic Post Office Default August 1 « Anne's POWER SURGE Blog - July 19, 2012

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