Thursday, September 27, 2012

Postal Service Set To Default On More Than $5 Billion Payment For Second Time Since August

The U.S. Postal Service may be able to deliver your bill payments, but it's having a little trouble delivering its own.

Come Sept. 30, USPS will default on a $5.6 billion payment mandated by Congress to prefund employee retirement benefits, CNNMoney reports. That will be the second time the government agency has defaulted in as many months after missing an August payment worth $5.5 billion.

While mail operations will continue as usual, the second default is yet another sign of the postal service's increasingly desperate financial situation. By May of this year it had already lost $6 billion.

Getting USPS out this mess won’t be easy, either. Its best hope would be for Congress to repeal a 2006 mandate that USPS prefund retiree benefits, a law for which National Association of Letter Carriers President Fredric Rolando, among others, blames the current crisis, according to the Washington Post. However, Congress isn’t likely to act until after the November elections and might not get around to it until the new year, the National Journal reports.

In the meantime, several efforts are being made to ease the postal service's woes. Most recently, USPS announced it would be increasing its volume of junk mail deliveries in an effort to build upon the $17 billion in revenue that portion of its business took in last year.

Service cuts, too, have been common. In May, USPS announced is would be closing 250 processing centers in order to cut costs. Post offices across the country have also reduced hours. In one extreme example, the post office in Sugar Creek, N.H., cut hours of operation to just 30 minutes a day.

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