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Postal Service Set to Default on Benefits Payment

Agency owes $5.5 billion by Aug. 1

By Mary Silver
Epoch Times Staff
Created: July 30, 2012 Last Updated: August 6, 2012
Related articles: United States » National News
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A patron enters a post office in Williamsburg Village Shopping Center in Atlanta on July 30. (Mary Silver/The Epoch Times)

A patron enters a post office in Williamsburg Village Shopping Center in Atlanta on July 30. (Mary Silver/The Epoch Times)

The United States Postal Service (USPS) announced Monday that it is set to default on a huge $5.5 billion benefits payment due Aug. 1. This will be the first time the Postal Service is unable to make the payment, used toward future retiree health costs and required by the federal government.

The struggling USPS is also set to default on an additional $5.6 billion due Sept. 30, which it also says it cannot pay. It lost $5.1 billion in fiscal year 2011.

The organization reassured patrons, employees, and retirees in a statement released July 30: “This action will have no material effect on the operations of the Postal Service. We will fully fund our operations, including our obligation to provide universal postal services to the American people,” stated the Postal Service.

“We will continue to deliver the mail, pay our employees and suppliers, and meet our other financial obligations. Postal Service retirees and employees will also continue to receive their health benefits.”

Postal Service delivery trucks in Williamsburg Village Shopping Center in Atlanta on July 30. (Mary Silver/The Epoch Times)

Postal Service delivery trucks in Williamsburg Village Shopping Center in Atlanta on July 30. (Mary Silver/The Epoch Times)

In an effort to provide more time, Congress rolled the due date forward last year, and is not likely to do it again before Wednesday. Nor is it likely to provide a long-term legislative solution this summer session.

The USPS has been pleading for legislative relief from the obligation for years. Congress passed legislation in 2006 to require the independent agency to prefund future retiree health care costs. No other agency has a similar restriction.

“The Postal Service continues to implement its strategic plan,” the USPS statement continued. “However, comprehensive postal legislation is needed to return the Postal Service to long-term financial stability.”

The Senate passed a bill in April that proposed letting the USPS spread out the health care benefit prepayments over a longer time. The 21st Century Postal Service Act (S. 1789) would have ended Saturday service, and arranged a way to fund early retirement incentives, so that the Postal Service could reduce staff and therefore salaries.

But the House has so far not moved to address the issue, despite claims last month from House leaders that its own version of a postal bill would be voted on before the summer break.

The 2006 legislation may be partially to blame for keeping the USPS insolvent, mandating billions each year to prefund future benefits.

Technological and social change is the other reason. Fewer people send written letters and fewer companies mail printed bills. The Internet, messaging, and email are having a tremendous impact on traditional mailings.

The USPS depends on revenue from stamps and other products and services. It does not take tax dollars.

Private parcel mailing services, such as FedEx and UPS, are competing against the Postal Service.

“It doesn’t have to be this way,” said Cliff Guffey, president of the American Postal Workers Union (APWU) in a statement. “Despite what some would have us believe, the Internet is not killing the Postal Service—and neither are costs associated with postal operations. In fact, the USPS continues to be an engine that drives our economy.”

Guffey called the USPS’s financial problems a “manufactured crisis,” and said the House bill, H.R. 2309, introduced by Rep. Darrell Issa (R-Calif.), would “end postal service as we know it.”

“I’d be very sad if it was gone. I think it’s essential,” said Atlanta businesswoman Joanne Steiner. In her opinion, the USPS is in trouble because it did not adapt quickly enough to technological change. Yet it provides valuable services that its competitors do not provide. She thinks new, strong leadership could turn the agency around, “but it might be too late.”

Steiner, small-business owner of Sips n Strokes, was mailing some items on Monday, and said she often uses the post office near her business.

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