Post Office Nears First Default in Its History
Updated July 18, 2012,
8:34 p.m. ET
By JENNIFER LEVITZ
While lawmakers continue
to fight over how to fix the ailing U.S. Postal Service, the agency's money
problems are only growing worse.
The Postal Service
repeated on Wednesday that without congressional action, it will default—a
first in its long history, a spokesman said—on a legally required annual $5.5
billion payment, due Aug. 1, into a health-benefits fund for future retirees.
Action in Congress isn't likely, as the House prepares to leave for its August
recess.
The agency said a default
on the payment, for 2011, wouldn't directly affect service or its ability to
pay employees and suppliers. But "these ongoing liquidity issues
unnecessarily undermine confidence in the viability of the Postal Service among
our customers," said spokesman David Partenheimer.
The agency says it will
default on its 2012 retiree health payment as well—also roughly $5.5 billion,
due Sept. 30—if there is no legislative action by then.
Most everyone agrees the
Postal Service needs an overhaul. It had a loss of $3.2 billion in the second
quarter of this fiscal year; it is to report third-quarter results on Aug. 9.
The agency blames factors including declining mail volumes and the unusual 2006
mandate by Congress that it annually set aside billions for future retirees.
But while the Senate has passed legislation to overhaul the agency, the House
says it doesn't expect to take up its own proposal until after August.
The two sides remain far
apart. Senators voted in April, on a bipartisan basis, for legislation that
largely shores up the agency's finances by returning an estimated $10.9 billion
overpayment made into the federal employee pension system. The legislation
limits the agency's ability to close postal branches and stop Saturday
delivery.
Republican House leaders
support legislation they say would require the agency to operate more like a
business, in part by setting up a panel to reduce the network of post offices.
Some rural-district House members, from both parties, have been worried about
closures in their areas.
A chief backer of the
House bill, Rep. Dennis Ross (R., Fla.), wouldn't consider financial relief in
the Senate bill "absent wholesale reforms" that are in the House bill,
said Fredrick Piccolo Jr., chief of staff for Mr. Ross. He said that there will
"in all likelihood be no vote before the August recess."
The office of Sen. Tom
Carper (D., Del.), one of the authors of the Senate bill, said Wednesday that
"every day that is lost in passing reform legislation puts the Postal
Service another step closer to collapse, and unfortunately it appears that
House Leaders are prepared to let that happen."
Write to Jennifer Levitz
at jennifer.levitz@wsj.com
Comments
Post a Comment