USPS Defaults Once Again on $5.6 Billion Payment
It's the third time the payment has been missed.
As if providing punctuation to last week's Senate hearing at which it begged for legislative relief from cash-draining pre-funding obligations, the United States Postal Service yesterday defaulted on its mandated annual $5.6 billion payment into the retiree healthcare fund. It marked the third time the Postal Service was unable to write the check.
“Today's default is another stark reminder of the Postal Service's dire financial situation,” said Sen. Tom Carper (D-DE) in a statement issued last night. Carper, along with Sen. Tom Coburn (R-OK), is the sponsor of the Postal Reform Act, which, among other things, seeks to lighten the Postal Service's pre-funding burden. “We have sat around for too long, watching as the financial challenges facing the Postal Service grow more difficult and the potential solutions become more expensive. It has been clear to me and to others for some time that we must act to save this $1 trillion mailing industry and the over eight million jobs that depend on it.”
Noting that the Postal Service is now in arrears to the fund in the amount of $16.6 billion, Coburn noted that “these payments are designed to protect the future benefits promised to postal workers, and short-changing this fund only jeopardizes their future. It is clear the time to reform the Postal Service has come.”
Carper and Coburn's bill asks for a new pre-funding plan that would be amortized over 40 years and significantly reduce USPS's annual obligation. In the House, Rep. Darrell Issa (R-CA) has introduced a postal reform bill that would forgive the Postal Service's unmade payments and delay any future payments until 2015.
Ironically, both labor and management are united on the issue of reducing the payments to allow healthy operation of the Postal Service. At last week's postal reform hearings held by the Senate Homeland Security and Governmental Affairs committee, National Association of Letter Carriers President Frederic V. Rolando was adamant on the topic.
“This bill fails to permanently address the mandate to pre-fund future health costs,” Rolando said. “Instead, the bill offers a three-year moratorium, at which point the payment will be greater than it is today. At which point the Postal Service will again default.”