Postal Service can't deliver payments

As Congress bickers over the future of the system, the USPS faces its first default ever.

By Kim Peterson Jul 23, 2012 11:38AM
The Postal Service has two massive payments this year that it simply doesn't have the money for, and it's expecting to default for the first time.

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.

173Comments
Aug 6, 2012 9:44AM
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Don't blame the Postal Service. Remember, the Republicans are the ones to blame here. Could someone else please tell me ANY other company that IS FORCED to pay, 75 Years in advance for retirement?
Not gonna find one, just another attempt at destroying government that actually works, to pad the "Free Markets" of FedEx and UPS's bottom line. 
Aug 1, 2012 2:24PM
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Man, I can't wait for government run healthcare! The government is so efficient with everything it does!

Healthcare will be so much better once Obamacare is implemented. What a great idea. Just like the Post Office and the DMV. Fast, efficient and friendly! It'll be great. I can't wait. It is bound to be 100% better than what I have now. No more worries about my healthcare being worse than Cuba's or Canada's free healthcare. Awesome, I can't wait. I'm so glad our government leaders are so smart and make great decisions!!!!

Jul 26, 2012 7:59PM
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I don't know what the politicians have in mind for not making it 5 -day delivery. If you survey, I am sure most will agree to 5 day...or alternate day delivery. If this could fend off some starin off USPS then be it. USPS does not ask money from govt....nor it is going in deficit because of govt. foolish policies. Its going broke because of lack of vision. USPS could have seen that coming years ago and worked on it from then itself. Although it is not too late but govt control of a kind-of-orivate entity is certainly not what we want.
Jul 24, 2012 4:32PM
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I don't think anyone wants to see the USPS fail, but until they're allowed to make the cuts necessary for survival this will be an ongoing problem. There was a time when if someone said we'd pay $10.00 for overnight service or a couple bucks for a cup of coffee or a bottle of water---we'd have said you're crazy. In fact, we do. Bill pay, I figure, has hurt them more then anything else. Hit enter and its done. I do remember Emory air. I also remember Railway Express. Times change---got to go with the flow. Fuller Brush, Electrolux, Jewel Tea, Charles Chips, Montgomery Wards, A & P,------gone.  Let them cut a day and close the non profitable offices. The Post rider is gone.

Jul 24, 2012 9:13AM
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Please privatize the post office.  The post office could then make market driven decisions and the tax payer could avoid billion dollar monthly fleecings.  God forbid we don't get our mailbox stuffed with junk mail on Saturdays or have to drive two miles further to the next post office.
Jul 24, 2012 12:32AM
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The check is in the mail!  BWAHAAAHAHAHAHAA
Jul 23, 2012 7:40PM
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How many people remember Emory air? It used to have the job, of doing the job for the post office, that Fed Ex. has been doing, flying post office cargo. Fed EX contributed heavily to GWB's campaign when he won the presidency for the first time. Shortly after GWB won office, the job of delivering post office cargo, was awarded to Fed Ex. on a no bid contract. Emory air had to cease operations, and over fifty thousand people lost there jobs. I sincerely hope UPS wins the postal contract, that they are putting up for bids, at this time. 
Jul 23, 2012 7:08PM
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Thank you Republicans for making one of the profitable government run services into ruins.  Why because of the Unions, Unions did not do this you did, with the law you passed in 2006 making them pay for the retirement plan for the next 75yrs, is this how other businesses run their retirement, hell no, this is all about control, and to get rid of the Union, and to privatize the postal service.  Well the majority of the people WANT their POST OFFICES, and privatizing them will only make the cost of stamp sky rocket, but what do you care, you don't the only thing you care about is controling this country.  You don't give a damn about he American people, economy, jobs, if you did the do nothing Congress would of passed some jobs bills, but no, that would mean it would help Obama, and the American people are the ones who are paying the price, but you will in November!
Jul 23, 2012 7:06PM
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USPS is only good for spreading hard-copied spam.
Jul 23, 2012 6:58PM
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It's really scary to listen to the extreme points of view in these posts. No wonder this country is in trouble.  Lots of finger pointing, but no understanding of what's going on.

I worked for USPS in my 20s and early 30s, and I currently work for UPS and I'm now in my late 40s.  Everyone is at fault in the USPS fiasco; Republicans, Democrats, Unions, Employees...everyone.

I will say that UPS makes a profit, funds it's pension and keeps union labor fairly happy.  So does FedEx.  It's really not that difficult.

Why can't the USPS do that?  Because it's government, because it's politics, because everyone wants to sh*t on each other.  I mean everyone.

G
Jul 23, 2012 6:58PM
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It's really scary to listen to the extreme points of view in these posts. No wonder this country is in trouble.  Lots of finger pointing, but no understanding of what's going on.

I worked for USPS in my 20s and early 30s, and I currently work for UPS and I'm now in my late 40s.  Everyone is at fault in the USPS fiasco; Republicans, Democrats, Unions, Employees...everyone.

I will say that UPS makes a profit, funds it's pension and keeps union labor fairly happy.  So does FedEx.  It's really not that difficult.

Why can't the USPS do that?  Because it's government, because it's politics, because everyone wants to sh*t on each other.  I mean everyone.

G
Jul 23, 2012 6:57PM
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The USPS is being used as a back door tax on the American people to the tune of $75 billion.  The USPS is being required to fund the health care of retirees who haven't even been born yet, much less hired by the USPS.  The USPS is required to pay into a retiree health care fund, then Congress takes that money and puts it into the general fund to be spent.  Just like they've been doing with Social Security money.  It was all passed into law in 2006 by a Republican Congress, and signed into law by a Republican President.  You know, the party that is supposed to be against higher taxes.  BTW, I voted for Bush for President, twice, and regret it every day.   
Jul 23, 2012 6:36PM
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The USPS is a SERVICE to the American People, the Republicans thought it was a good idea to make it a business! NOW LOOK AT IT! Fixing to bankrupt! Why aren't the corrupt Republican corporate MONARCHY paying for the service since they wanted it to be a company! A company is not a service, but since they made it that why can't they pay for the POSTAL WORKERS retirement fund? They say it's a business, so let them pay for it! They stole our GUARANTEED pensions and gave  us their INSURANCE POLICY 401k that says if they fail so will we!!! Now they want to take out the union from the postal service!  Their corruption NEVER ENDS! ALL FOR THEM & NONE FOR the 99% American People! The SAME PEOPLE that MADE THEM SUCCESSFUL in the FIRST PLACE!!
Vote 100% STRAIGHT DEMOCRATIC and let's rid our selves of their corruption!

Jul 23, 2012 6:31PM
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The postal service could survive if they did two simple things: first, delivery of mail, should be every other day. (period).

Second, lower the price of bulk mail. If bulk mail was cheaper - businesses would mail more (you call it, junk) mail.

The mail man is delivering anyway - they might as well be utilized a little more.


Jul 23, 2012 6:25PM
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Don't you think it's about time for the corrupt Republican corporate MONARCHY that use the USPS to deliver their junk mail & invoices to their customers to start taking care of our postal service? It was meant to be a "SERVICE to the American People and NOT A BUSINESS as ALL government agencies were meant to be"! It's time for these corrupt Republican corporates to start anteing up!
They've been STEALING from the  99% American People LONG ENOUGH and ENOUGH IS ENOUGH!!
Vote 100% STRAIGHT DEMOCRATIC and let's rid our selves of their corruption ONCE & FOREVER!
The lives you save WILL be YOURS & your CHILDREN! BELIEVE IT!!

Jul 23, 2012 6:23PM
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between the both sides it's a sinking ship and the tax payers are gonna foot the bill when it sinks,i worked for a trucking contractor and seen how things ae run,it's a miracle thinds get done at all.the 3 shifts don't work at all together.when staffing is cut their told to slow down by their shop stewarts.

Jul 23, 2012 6:17PM
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To my2-centsworth

 

How are you paying for the post office?  Because their not its a self generating business.  Youd better pray that they dont go bankrupt.  One its the second largest employer in the US.  You lay these people off guess who pays for it the tax payers when they collect unemploymen.  Second unemployment rate would sky rocket and the econonmy would take a plummet. No where in any of your taxes can you find a part for the  Post Office.  I dont work for the Post Office and never have but please dont voice your opinion when all your doing is ranting with no actual facts.

Jul 23, 2012 6:17PM
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The Republican answer to everything.  Take away the employees' pay, pensions and unions and get a foot on their necks.  That'll save the day.  This guy Issa is just as nutty as Col. Mitch and Boner, the comedy act that runs the government these days.
Jul 23, 2012 6:12PM
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This mandate was given by the Bush Congress.  The post office cannot do anything unless approved by Congress.  They have never been allowed to run as a business.  The post office is NOT funded by the government. Their sole source of revenue is the fees they get from sales.  Were it not for the mandate they would be in the black.  Please see earlier post on retirement benefits.  I receive $900 per month for 23 years of service.  I pay part of my life insurance but could not afford to pay for the medical.  I retired at 62 because I could no longer stand in one spot all day due to arthritis in my knees.  I loaded and unloaded mail trucks in addition to my retail position until the day I retired.  Not all postal employees are lazy.  There are many of us who worked for our paycheck.
Jul 23, 2012 6:10PM
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Geore Dubya Bush, formed a Postal Committee in 2006, that determine

the Postal Service pay 5.5 billion a year to prefund Postal retirement

which will prefund retirement benifits for Postal workers up to 70 years

from now.  Basically its a Tax on the Postal Service that no other

buisness in the world has to pay, for retirement funds which will

probably be as solvent as Socail Security since it goes in the same

General fund and will run out since the 5.5 billion just disapppears.

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