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:

Define "Mandated" RT: @zerohedge: POSTAL SERVICE SAYS IT WON'T MAKE MANDATED PAYMENT ON SEPT. 30

— Drew McCoy (@_Drew_McCoy_) September 26, 2012

<== Not my Shocked Face. RT @zerohedge: POSTAL SERVICE SAYS IT WON'T MAKE MANDATED PAYMENT ON SEPT. 30

— Tom (@BoreGuru) September 26, 2012

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:

Privatize!! "@zerohedge: USPS Bailout Imminent: Postal Service Will Miss September 30 'Mandated' Payment http://t.co/60Qh3BV4"

— ASP®™⭐️⭐️⭐️ (@ItoParedes) September 26, 2012

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.