Without last-minute help from Congress, the U.S. Postal Service is likely to default on a big bill due Wednesday to the federal government — $5.5 billion to prepay health care benefits for retirees.
While default would be a first for the Postal Service, it’s largely symbolic. Postal officials have pledged that employees and subcontractors will continue to be paid and mail will be delivered as normal.
“The U.S. Postal Service will not make mandated prefunding retiree health benefit payments to the Treasury,” the service said in a statement Monday. “This action will have no material effect on the operations of the Postal Service.”
Still, postal officials have said they’re bracing for default on the payment. They also don’t have the money to make a $5.6 billion payment due Sept. 30.
Congress alone has the power to help the service. The Senate passed a bill to help the service back in April, but the full House has yet to consider the issue.
The service is in a financial bind, having reported several quarters worth of multi-billion-dollar losses due to the recession, declining mail volume and the congressional mandate to prefund retirement health care benefits for future retirees.
The real loss could come as more postal customers turn away from U.S. Mail and question its long-term stability, said Art Sackler, a co-coordinator for the Coalition for a 21st Century Postal Service, a group of businesses that depend on mail service.