Mandate by Congress Forces Post Office Into Default

Published on August 9, 2012 by admin   ·   No Comments

 Brandon Turbeville/Activist Post

On Friday, August 3, 2012, the United States Postal Service experienced its first-ever default on a Congressionally-mandated payment of $5.5 billion for the retirement benefits of future employees.

Although USPS is claiming that, for now, the default will have “no material effect” on the operation of the Post Office and that the agency will continue to deliver mail and pay employees, the fact is that this financial quandary has raised new questions regarding just how long the agency will be able to operate.

After all, the USPS is expected to default on the second half of this payment – another $5.6 billion – in September.

Congress is now debating what to do about the default and the question of how or if the USPS will continue to function in the future. FOX News reports that;

While the Senate passed a bill in April that provides an $11 billion cash infusion to help the mail agency avert a default, it would also delay many of the planned postal cuts for another year or two. The House remains stalled over a measure that allows for the aggressive cuts the Postal Service prefers, in large part due to concerns among rural lawmakers over cutbacks in their communities.

The Postal Service originally sought to close low-revenue post offices in rural areas to save money, but after public opposition it agreed to keep 13,000 open with shorter operating hours. The Postal Service also is delaying the closing of many mail processing centers, originally set to begin this spring. The estimated annual savings of $2.1 billion won’t be realized until the full cuts are completed in late 2014.

Senate Democrats have urged the House to act quickly so that the two chambers can iron out the differences between their two bills. The House, though, is not expected to act until September or later.Keep in mind, September is the projected date of the second default.

Nevertheless, the report continues describing the pitiful state of the Post Office by mentioning the “crisis of confidence” in the USPS by customers and large clientele. It reads;

Postmaster General Patrick Donahoe has described a “crisis of confidence” amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail.

Banks are promoting electronic payments, citing in part the growing uncertainty of postal mail. The federal government will stop mailing paper checks starting next year for millions of people who receive Social Security and other benefits, paying via direct deposit or debit cards instead.

However, while most lawmakers are predictably blaming the opposing party, at least one member of Congress, Dennis Kucinich, has been speaking out against what he has termed the “manufactured default” of the USPS. Kucinich actually stated on the Congressional floor that Congress is “presiding over the disestablishment of the Postal Service.”

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