Postal Service Default
September 29, 2012 by staff
Postal Service Default, The U.S. Postal Service, on the brink of default on a second multibillion-dollar payment, is sounding a new cautionary note that, having squeezed out all the cost savings within its power, the mail agency’s viability now lies almost entirely with Congress.
In an interview, Postmaster General Patrick Donahoe said the mail agency will be forced to miss the $5.6 billion payment due to the Treasury on Sunday, after failing to pay $5.5 billion last month.
For more than a year, the Postal Service has been seeking legislation that would allow it to eliminate Saturday mail delivery and reduce its $5 billion annual payment for future retiree health benefits. The House has failed to act, and Congress has left Washington until after the November elections.
“Absolutely, we would be profitable right now,” Donahoe told The Associated Press, when asked whether congressional delays were to blame for much of the postal losses, expected to reach a record $15 billion this year.
He said the two missed payments totaling $11.1 billion for future retiree health benefits — payments ordered by Congress in 2006 that no other government agency or business is required to make — along with similar expenses make up the bulk of the annual loss. The remainder is nearly $3 billion in losses, he said, which would have been offset by savings if the service had been allowed to move to five-day mail delivery.
Donahoe said the post office will avert immediate bankruptcy because of a series of retirement incentives, employee reductions and boosts in productivity that saved nearly $2 billion over the past year.
But the post office has few tools left to build its revenue, he said, without either having to pay upfront money it lacks or get approval from postal unions or Congress.
Postal unions also say Congress is mostly to blame for losses.
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