U.S. Postal Service default appears likely

1:29 PM, Jul 13, 2012   |    comments
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By Sean Reilly, Federal Times

WASHINGTON -- The cash-strapped U.S. Postal Service is within weeks of defaulting on a legally required $5.5 billion payment into a health benefits fund for future retirees.

So far, it appears House leaders have no intention of preventing that from happening -- they have postponed any action on relief measures until at least fall.

While a Senate-passed bill would significantly reduce the amount of the payment, the House has not acted on that legislation. House leaders also have reversed plans to take up a rival measure that would cut the payment to $1 billion, according to a spokesman for one of the measure's sponsors, Rep. Dennis Ross, R-Fla.

"It appears, although we have the votes, leadership does not intend for postal reform to come to the floor before (the) August recess," the spokesman, Fred Piccolo, said in an email late Wednesday.

Under a schedule laid out in the 2006 Postal Accountability and Enhancement Act, the Postal Service also is supposed to make a $5.6 billion payment into the retiree health fund at the end of September.

"Without congressional action, we will default on both payments," Postal Service spokesman Dave Partenheimer said in an email Thursday.

Lawmakers appear likely to let the Postal Service default, representatives of mailing industry groups said Thursday.

"They'll let them default," said Gene Del Polito, president of the Association for Postal Commerce. "What time is there left to do anything?"

While a default would be embarrassing for the Postal Service, the practical consequences, if any, are unclear.

"We will continue to pay employees and suppliers to keep the mail moving," Partenheimer said. Current retirees' benefits would not be affected.

Both the House and Senate will be on break Aug. 6 to Sept. 7; after that, the House is scheduled to be in session for only three weeks in September and October, according to a schedule posted on its website.

Tony Conway, executive director of the Alliance of Nonprofit Mailers, sees little chance of an intervention from Congress before next month's deadline. Lawmakers have "got all this stuff on their plate, and they're running out of time. And there's no vehicle, so it doesn't appear it's something they're going to get to," he said.

The health-care payment originally was due in September 2011, but Congress deferred it until Aug. 1.

In requiring the Postal Service to build up the health benefits fund, lawmakers' stated purpose was to ensure coverage for future retirees without resorting to taxpayer assistance. But Postal Service executives and unions have objected that no other business or government agency faces a similar mandate.

Although the agency has struggled to make the payments in recent years, Congress has twice stepped in, either to reduce the legally required amount or to push back the deadline.

Federal Times

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