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Post Office $5.6 Billion Default Raises Urgency of Reforms

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Photo Credit: APWith Congress and the media focused on the government shutdown and how to avoid default on the national debt, little attention was directed toward the U.S. Postal Service which earlier this month defaulted on a required $5.6 billion payment for the healthcare of its future retirees.

The third default on the down-payment in just over a year underscores the necessity of much-needed reforms for the beleaguered Postal Service.

Rep. Darrell Issa of California told Newsmax that without “the freedom to realign its infrastructure and operations in line with the changing way Americans use mail, the agency will remain insolvent.”

“Prolonged insolvency of USPS will result in a massive taxpayer bailout and ongoing subsidy, or a sudden disruption in mail service, or both,” the California Republican said.

Just days before the default, USPS Board of Governors Chairman Mickey Barnett announced an increase in the price of stamps beginning in 2014, which he said was the result of USPS’ “precarious financial condition” and the “uncertain path toward enactment of postal reform legislation.”

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Congressional ‘Success’ Story: 20% of all New Laws are for Naming Post Offices

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Photo Credit: Shan213Pillory Congress all you want as do-nothing or dysfunctional, as its critics often have. But in one respect, lawmakers in the Capitol are remarkably productive: they name post offices like nobody’s business.

A new report from the Congressional Research Service, the nonpartisan research division of Congress, found that about 20 percent of laws passed in recent years were for naming post offices.

As Congress has become less and less efficient, the numbers are all the more striking. In the 111th Congress, which met from 2009 to 2010, members passed 383 statutes, 70 of which named post offices. In the 112th Congress, the last Congress to meet before the current one convened in January, members passed 46 measures naming post offices, out of 240 statutes over all.

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Postal Service to Cut Saturday Mail

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Photo Credit: ABC OTUS NewsThe financially struggling U.S. Postal Service said Wednesday it will stop delivering mail on Saturdays but continue to disburse packages six days a week, an apparent end-run around an unaccommodating Congress.
The service expects the Saturday mail cutback to begin the week of Aug. 5 and to save about $2 billion annually, said Postmaster General and CEO Patrick R. Donahoe.

“Our financial condition is urgent,” Donahoe told a press conference.

The move accentuates one of the agency’s strong points — package delivery has increased by 14 percent since 2010, officials say, while the delivery of letters and other mail has declined with the increasing use of email and other Internet services.

Under the new plan, mail would be delivered to homes and businesses only from Monday through Friday, but would still be delivered to post office boxes on Saturdays. Post offices now open on Saturdays would remain open on Saturdays.

Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages — and it repeatedly but unsuccessfully appealed to Congress to approve the move. Though an independent agency, the service gets no tax dollars for its day-to-day operations but is subject to congressional control.

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US Postal Service preparing for first-ever default, will miss billions in payments

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Photo credit: Gerry Dincher

The U.S. Postal Service is bracing for a first-ever default on billions in payments due to the Treasury, adding to widening uncertainty about the mail agency’s solvency as first-class letters plummet and Congress deadlocks on ways to stem the red ink.

With cash running perilously low, two legally required payments for future postal retirees’ health benefits — $5.5 billion due Wednesday, and another $5.6 billion due in September — will be left unpaid, the mail agency said Monday. Postal officials said they also are studying whether they may need to delay other obligations. In the coming months, a $1.5 billion payment is due to the Labor Department for workers compensation, which for now it expects to make, as well as millions in interest payments to the Treasury.

The defaults won’t stir any kind of catastrophe in day-to-day mail service. Post offices will stay open, mail trucks will run, employees will get paid, current retirees will get health benefits.

But a growing chorus of analysts, labor unions and business customers are troubled by continuing losses that point to deeper, longer-term financial damage, as the mail agency finds it increasingly preoccupied with staving off immediate bankruptcy while Congress delays on a postal overhaul bill.

Postmaster General Patrick Donahoe has described a “crisis of confidence” amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail.

Read more from this story HERE.