US Postal Service Set To Default On Second $5 Billion Payment

The US Postal Service is in danger of defaulting on a second multi-billion dollar payment it can’t even afford to pay.

Postmaster General Patrick Donahoe has said that the USPS will have to miss its $5.6 billion payment to the US Treasury on Sunday, representing the agency’s second default in two months, reports Fox News.

The Postal Service has been seeking legislation for more than a year, which would let it eliminate Saturday delivery and also reduce what it has to pay for future retiree health benefits, but Congress has left Washington D.C. until after the November elections, making it impossible for the decision to be made before the USPS defaults again.

While the agency will hit a low point in cash next month, they will avert having to file for bankruptcy, at least for now, because of employee reductions. Yahoo! News notes that the post office has been seeking to reassure customers that service will not be disrupted, despite the low cash levels.

When Donahoe was asked if congressional delays were to blame for much of the problems plaguing the US Postal Service, the Postmaster General responded, “Absolutely, we would be profitable right now.” The office’s losses are expected to reach an all-time high of $15 billion in 2012.

The two missed payments total $11.1 billion for future retiree health benefits, as well as similar expenses, along with a $3 billion loss. The health benefits payments were ordered by Congress in 2006, despite the fact that no other government agency or business is required to make them.

While postal unions agree that Congress is mostly to pay for the USPS’s losses, they disagree that a reduction to five-day delivery is the best answer. Fredric Rolando, president of the National Association of Letter Carriers, stated:

“What is needed is for Congress to undo the harm it has done with the prefunding mandate and for the Postal Service to develop a balanced plan moving forward.”

He believes that cutting Saturday delivery would especially impact rural residents and the elderly, who depend heavily on the mail service for prescription drugs and other goods.

The past two months are the first times the US Postal Service has ever defaulted on a payment.

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