By Michael Winter, USA TODAY
Because of congressional inaction, the U.S. Postal Service today defaulted on a $5.6 billion pre-payment for future retiree health benefits, the second such default in two months.
The Postal Service missed a $5.5 billion payment in August, bringing the missed pre-payments to $11.1 billion for the fiscal year that ended Sunday. Overall, the postal service expected a $15 billion deficit for last year, and a projected shortfall of $238 billion over the next 10 years.
Congress mandated the early funding in 2006. No other government agency or private business is required to make such over-payments.
Despite the defaults, "customers can be confident in the continued regular operations," Postmaster General Patrick Donahoe said in a statement.
"We will continue to deliver the mail and pay our employees and suppliers. Postal Service retirees and employees will also continue to receive their health benefits," Donahone said, noting that current retirees' health care is paid from the agency's general operating budget.
"Comprehensive reform of the laws governing the Postal Service is urgently needed in order for the Postal Service to fully implement its five-year business plan and return to long-term financial stability," Donahoe said.
Facing declining mail volume, the Postal Service has proposed several sweeping measures to reduce losses, including ending Saturday delivery, closing mail handling centers, reducing staffing, cutting local post office hours and starting new shipping services to compete with UPS and Fedex.
The Senate has passed legislation to restructure the Postal Service that would allow it to tap into its retiree overpayments, allow some proposed changes, but not eliminate Saturday delivery. (Read a summary.) The House has declined to act on similar bills. Congress recessed last month until after the November election.
A spokeswoman for House Majority Leader Eric Cantor, R-Va., would not comment last week on whether the lame-duck session would take up postal-restructuring, says the Federal Times, published by Gannett, USDA TODAY's parent.
In reporting today's default, Government Executive writes, "Congress has punted on the question of a solution until after the election. Expect Congress to fight Postal Service efforts to put ending Saturday delivery on the table as well as closing many rural post offices." The four postal unions are also challenging proposals to shutter processing centers or reduce post office hours, and to end no-layoff guarantees in future contracts.
Before the August default, one of the unions, the National Association of Letter Carriers, noted in a press release that the Postal Service "already has $45 billion set aside for future retiree health benefits - more than any other organization in America - and yet Congress wants to drain still more from the USPS."