U.S. Postal Service will default on mandatory $5.6 billion retiree health benefit payment

Well, this is encouraging. Today, the floundering U.S. Postal Service announced that it will fail to deliver on a mandatory $5.6 billion payment for retiree health benefits. The payment is due on September 30.

For the second time in two months, the U.S. Postal Service will not make a mandated payment to prefund retiree health benefits. Absent legislative action, the Postal Service is unable to make a scheduled $5.6 billion payment to the U.S. Treasury on Sept. 30. As was the case with the default of a similar $5.5 billion payment due August 1, customers can be confident in the continued regular operations of the Postal Service. 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. The health care for current retirees is paid from the Postal Service’s general operating budget and is not affected by the Postal Service’s inability to make the accelerated payments mandated by Congress as part of a 2006 law.

The USPS insists that its day-to-day operations will not be affected by the default. That’s little consolation to Americans becoming increasingly accustomed to governmental failures:

The USPS touts its financial independence on its website:

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

But citizens still reeling from previous government bailouts are convinced that a bailout of the postal service is inevitable:

If and how the government will respond remains to be seen, but it’s all too clear right now that we’re on an unsustainable path. Leaving the government responsible for a maintaining a money pit like the USPS is just begging for trouble. The prospect of privatizing the postal service was raised once again:

The solution may not be quite that simple, though it’s certainly worth serious consideration. Privatization is often the key to an industry’s success. And there’s no doubt that the citizens who are actually on the hook when a government institution goes belly-up are in a much better position to determine what’s best for our country than those who continuously elect to squander our financial resources.

  • Grumpa Grumpus

    I wonder if those retired Postal Union members will still heart their union and the big golden uninterruptable retirement their bosses have?

    Instead of their dues going to buy politicians, lavish study groups in exotic locations for the union leaders, and multi-million dollar shindigs for retiring union bosses, perhaps it would have been better spent in the retirement fund?

  • Grumpa Grumpus

    Also, while technically they don’t receive gov.support — ie, no dollars — they in kind support simply b/c by law they set delivery rates for everyone else.

    That’s right! They tell carriers such as UPS & FedEx how much they can charge.

    I’ve also read (but have yet to pin down and verify) that the USPS also sets the delivery rates to places. By that I mean the times and regions of delivery.

    I was told the last by an retiring employee for UPS. He told me the company had lobbies for a “same day” and to change the regions in the US where Next Day etc could be delivered.

    I admit this was around 2004, but most things the gov. gets its claws into only get worse, so I don’t think these things have changed.

    • Michelle

      The USPS absolutely, positively, in no way whatsoever tells UPS, FedEx or any delivery service what they can charge and where they can go. You were sold a whole bunch of hogwash.

    • Catchance

      The Private Express Statutes (PES) are a group of laws placing restrictions on the delivery of letters by any organization other than the USPS. Congress passed PES in 1792. It’s only for letters, not parcels, and there are some exceptions: “Extremely Urgent” letters, which must cost at least the greater of $3 or twice what the First Class or Priority mail service would cost, or they must be delivered within strict time limits, and records of pick up and delivery must be maintained for USPS inspection if the time exception is used. Fed Ex and UPS use these.
      Apparently there is also something called “lawful private carriage” but the regular postage has to be affixed in addition to any private postage.

  • Chip

    I worked at USPS. Unions killed USPS.

    • carla5731

      I hope they find a way to survive. My experience with USPS has been overwhelmingly positive during my life. It’s tough to say that about any other government agency, particularly one that provides service six days a week.

  • carla5731

    It’s too bad the federal government hasn’t held themselves to the same standard when it comes to Social Security. They had no problem with turning that surplus into debt, and are now telling younger workers they can look forward to higher payroll taxes, higher retirement age, reduction in benefits and means testing in order to make up the difference.

  • Elaine

    OK.. SOOOO someone tell my why in August I got a full page, two sided, COLOR cardboard flyer sent to me about the USPS HIRING??? I’m dead serious. I was shocked because I thought they were BROKE? Look here: https://twitter.com/i/#!/equaltreatment/media/slideshow?url=pic.twitter.com%2FHyBud05 Second side is next photo. All over New England we got these???

    • Elaine

      Can ANYONE explain this????? Why are they hiring in AUGUST? The IRS is hiring tons of ppl too?I thought we were BROKE? Someone’s messing with employment numbers before October results?

  • Lyle E Long

    UPS did a study a few years ago and said they could deliver the mail for $.16 each

  • NWFL Conservative

    I have been saying for years that the USPS should be disestablished and the business put out to bid to UPS, FedEx, DHL and others. Competition is healthy, it lowers prices and keeps them lower, forces the parties involved to be more economical and mindful of their balance sheet. This is a PERFECT example of how the government fails where private industry flourishes.

    • Michelle

      The Government doesn’t run the Post Office. And private industry doesn’t always flourish in this case – FedEx is currently eliminating routes, pushing FT drivers to PT and offering early retirement buy-outs because it’s…losing money.

      • AMERICAN Kafir™(KAdams)

        I was going to say… the USPS is as federal as the Federal Reserve and Federal Express…

  • http://twitter.com/MoueLaMoue Moue La Moue (D)

    My Father is a twenty plus year Veteran of the US Navy. He has ALWAYS worked, no matter what. When he retired from the NAVY, they told him, seek a job, check with the Postal Service! Did he get hired? A very able-bodied individual who served his country and received countless medals for doing so? Nope. He got outed for a Union employee who, my father was later told, quit because they didn’t like the hours!

    ARE YOU KIDDING ME?!?! Give JOBS to Veterans. They KNOW what it means to WORK, they know what it means to GET THINGS DONE!