Postal Woes

‘Neither snow nor rain nor heat nor gloom of night stays these couriers from swift completion of their appointed rounds,” reads the inscription over the entrance of the James Farley Post Office in New York City. Unfortunately, that list does not include crippling debts.

Today, unless Congress acts — which seems unlikely to the vanishing point, given partisan disagreements over how to address the problem — the United States Postal Service is set to default for the first time in the 237-year history of the U.S. Post Office/Postal Service, failing to make a $5.5 billion payment to the U.S. Treasury for future retiree health benefits.
This news is just the most recent development in a long list of postal woes. The USPS estimates that it is losing $25 million a day, and the agency faces another $5.6 billion payment in September that it also lacks the ability to pay. Moreover, having lost nearly $25 billion in the last five fiscal years, the Postal Service is looking at widespread service cuts; it would like to close up to 3,700 post offices and 220 mail-processing plants by 2015.
The default, should it occur, will not immediately affect services — trucks will still be on the roads, payroll will be met, and current retirees will get their checks. Instead, the default will affect the USPS’s fund for future retirees, an obligation established in the 2006 Postal Accountability and Enhancement Act. Up until then, the Postal Service simply paid retiree health benefits when they came due. The new law required the agency instead to account for 75 years’ worth of retiree benefits on its balance sheet and to begin to pay down its unfunded liabilities. It gave the USPS a ten-year period to transition to the new system.

Read more: http://www.nationalreview.com/articles/312802/postal-woes-harry-graver