US Postal Service could face Default by the end of September

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(Best Syndication News) - The United States Postal Service may default if they cannot come up with $5.5 billion to pay for a pre-funded retiree health benefit plan, according to Postmaster General Patrick Donahoe. He warned that if legislation were not enacted by the end of this month, the Postal Service would default.

Donahoe explained the financial crisis to a Senate committee today. The $5.5 billion was a congress-mandated annual payment that the US Postal Service is not prepared to pay this year. Additionally, Donahoe said that in order to return to a profitable operation, the postal service would need to reduce their career workforce to approximately 220,000 by 2015. There is a problem with downsizing their employees because of existing collective bargaining agreements.

Donahoe also is asking lawmakers to address the law requiring the annual payments of $5.5 billion to pre-fund retirement health benefits. New laws would be needed to return $6.9 billion in Federal Employees Retirement System overpayments.

The Postmaster General also suggested that the lawmakers give the Postal Service the ability to determine delivery frequency. He suggested that the postal service should have an independent healthcare system separate from the federally run program. There needs to be a contribution-retirement plan for new hires instead of the current retirement plan, he explained. Additionally, Donahoe would like to see a faster method to develop products and pricing for their services.

The Postal Service has been continually cutting spending and operating costs over the last four years. They have reduced spending by $12 billion and have cut 110,000 career workers from their service. They need to reduce their annual costs by $20 billion by 2015 in order to become profitable again.

The US Postal Service relies strictly on their postal services, selling postage, and other products to pay for their operating expenses. They do not receive any tax dollars to help pay for their expenses.

By: Tom Madison



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