Postal Service can't deliver payments
As Congress bickers over the future of the system, the USPS faces its first default ever.
The service owes a $5.5 billion payment due Aug. 1 that was deferred from fiscal 2011, The New York Times reports. Then it has $5.6 billion payment due at the end of September.
Post continues below.
The payments are for future retiree health benefits, part of the Congressional requirement that the Postal Service pre-fund the benefits for future retirees. The mandate has become too expensive for the Postal Service to meet while fulfilling all of its other obligations.
The Postal Service isn't declaring bankruptcy, nor will it stop functioning on Aug. 1. But this is an issue that lawmakers must take action on, because it isn't going away.
The U.S. Senate passed a bill in April that returns $11 billion the service has overpaid into one of its pension funds, the Times reports. The bill also gives the service more years -- about 40 -- in which to make its payments, thus dropping the annual total to $2.5 billion. It also delays for two years the inevitable move to five-day delivery.
But House republicans hate the bill, which is one reason they have put off a vote on it indefinitely. Rep. Darrell Issa, R-Calif., has offered another proposal that breaks union contracts and gives the service a fast deadline by which it must make drastic cuts to Saturday service and its plants and locations.
Labor unions hate both bills, but they especially hate Issa's proposal. They say the fix here is to end the mandate to pre-fund retiree benefits.
Without any sort of legislative solution, Congress can keep putting short-term bandages on the Postal Service. And an eventual bankruptcy keeps getting closer.
The Postal Service, meanwhile, has told FedEx (FDX) that it will seek bids for new partners after its longtime contract with the company ends next year. FedEx has provided service for the USPS since 2001 and received an estimated $1.5 billion in revenue last year in the contract.
Instead of renewing with FedEx, the Postal Service will make the company compete for a new contract. Rival UPS (UPS) is already preparing to bid, Reuters reports.
Cannot believe the mis-informed people on this post.
It is not Obama that wants the Post Office to Pre-Fund (yes, look at the word - PRE-FUND) Health Insurance for the next 75 years (yes, that is correct - 75 YEARS). That means they are funding Health Insurance for two generations of Postal Carriers/Workers that have not even been born. Anybody, and I mean seriously anybody tell me a Private Company that is or would be compelled to do this much Pre-Funding. The Post Office can be operating in the BLACK and doing just fine if the Rules of Government Agencies (such as Congress) were applied to them. Notice I say "Rules of Government Agencies" and not "Rules of Other Government Agencies", and that is because US Post Office is not a Government Funded Agency. So Tell Rep Issa to quit his whining and to leave the Post Office alone. All he can see is there is money to be made by privatizing this Service even more, and he want his kickback.
The USPS is the ONLY company in the world required to prepay benefits. This was done by congress and will not be changed by them because they have used the money for other things.
As a postal employee I understand that as the change to electronic communication continues to advance it is only a matter of time before my job is gone.
As for the statement of us being over paid and entitled I believe that may have been true in the past but I know none of the 750 employees I work with feel that way! We are proud of where we work and work very hard on a daily basis to make it successful. There are many single parents that I work with that have at least one other job or work with us parttime just to make ends meet.
All of those ELECTED MORONS will be on the outside looking in come November!
Overall it seems the Feds are going to continue to force the USPS to prepay retirement to them which will allow the Feds to "abuse their privileges of 'holding' the retirement funds" just like they did with the Social Security funds replaced with I O U's that can now never be covered. Spoiled rich brats elected into offices mismanaging all the money as they have no clue to how live within a budget, nor how to make a budget, nor how to live 'normally' without all the expensive elite expenditures within their positions. While the working man and woman suffers with stupidity placed on the USPS providing good career positions for many people that the Govt doesn't seem to give a hoot if they screw that up. What next are they going to kill thousands upon hundreds of thousands more jobs?
They are bought and paid for long before they get to the national level.
Congress ( House and Senate ) is incapable of doing what they were sent there to do.
Profit and Greed will always take priority over common sense.
So until someone figures out how to make a non-greedy human, then we get what we deserve.
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