The U.S. Postal Service will default this week on a $5.6 billion congressionally mandated obligation to prefund retiree health benefits, marking the second time in two months the cash-strapped agency has done this.
The Postal Service last month failed to pay $5.5 billion for its fiscal 2011 prepayment obligation, which originally was due September 2011 but was deferred by Congress until Aug. 1. That was the first time it ever defaulted on a payment to the Treasury Department. The $5.6 billion due this week, on Sept. 30, represents this fiscal year’s obligation.
Prior to this year, Congress helped USPS defer prefunding payments required by a 2006 congressional mandate. Postal reform has challenged this Congress. Lawmakers warn that when they revisit the issue after the November election they likely won’t reach agreement on as major an overhaul as some deem necessary. USPS lost $5.2 billion in the third quarter of fiscal 2012, $2.1 billion more than during the same time period in 2011.
Source: Government Executive. Read full article. (link)