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Posted at 12:15 PM ET, 07/31/2012

Postal Service default looming, Congress expected to do nothing


Letter carrier Felipe Raymundo moves a tray of mail to his truck to begin delivery Dec. 5, 2011, at a post office in Seattle. (Elaine Thompson - AP)
The U.S. Postal Service is on the verge of defaulting on billions of dollars in payments due to the U.S. Treasury, but Congress isn’t any closer to resolving the delivery service’s financial woes.

On Wednesday the first of two legally required payments come due, a $5.5 billion obligation to fund future postal retiree health benefits. Another $5.6 billion is due at the end of September. But with mail volume and revenues plummeting — leading to roughly $25 million in losses each day — USPS has warned it will be unable to make the payments and may need to delay other obligations, including a $1.5 billion payment to the Labor Department for workers compensation.

The Postal Service doesn’t use taxpayer money to fund operations, but is regulated by Congress, which for years has passed short-term resolutions to prop up its sagging finances.

In an attempt to pass long-term structural reforms, the Senate passed a measure in April that would provide $11 billion to avoid default and pay for other costs. But the original Senate proposal was weakened by dozens of amendments delaying the proposed closure of post offices and mail processing facilities, especially in regions serving far-flung rural communities.


U.S. Postmaster General Patrick Donahoe has warned that the Postal Service could go broke in October. (Andrew Harrer - BLOOMBERG)
In the House, a committee passed a more aggressive plan last year that would permit USPS to close thousands of facilities, renegotiate labor contracts and establish a financial control board to overhaul the system’s finances.

But GOP and Democratic aides now don’t expect the House to consider the legislation until September at the earliest. And the bill’s chief sponsors don’t seem too concerned about Wednesday’s expected default.

“The default by the Postal Service on its obligation to its own employees and retirees follows decades of mismanagement and a willful blindness to fundamental changes in America’s use of mail,” said Rep. Darrell Issa (R-Calif.), the bill’s lead sponsor. “The Postal Service continues to fail to do all it can under current law to cut costs.”

Issa and his colleague, Rep. Dennis Ross (R-Fla.), have called on postal officials to make broader operational cuts and pushed the delivery service to seek greater concessions last year from postal unions during months-long contract negotiations.

Ross cautioned against using Wednesday’s default as a way to justify supporting the Senate’s proposed $11 billion cash infusion, calling it “an excuse to shift billions of taxpayer dollars into USPS coffers.”

“Congress must reject calls for a taxpayer funded bailout and instead focus on the need to enact comprehensive reform that mandates cuts to operating expenses in order to restore long-term solvency,” Ross said.

Issa, Ross and other GOP leaders have insisted that they have the votes needed to pass their bill — but haven’t tested that theory by bringing the bill to the floor.

Aides to House Majority Leader Eric Cantor (R-Va.) did not return requests for comment on when, if ever, the bill might earn a full House vote.

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By  |  12:15 PM ET, 07/31/2012

 
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