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.
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!!!!
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.
Vote 100% STRAIGHT DEMOCRATIC and let's rid our selves of their corruption!
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!!
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.
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.
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.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
VIDEO ON MSN MONEY
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus Briefing.com consensus 163K), but a closer look into the report suggested that ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'