Postal Service warns of missed payments
WASHINGTON — The U.S. Postal Service warned Thursday that it will likely default on up to $6.9 billion in payments for future retiree health and pension benefits for the fifth straight year, citing a coming cash crunch that could disrupt day-to-day mail delivery.
The service said it expected cash balances to run low by October and to avoid bankruptcy would likely not make all of its payments as required under federal law. Postmaster General Megan Brennan stressed an urgent need for federal regulators to grant the Postal Service wide freedom to increase stamp prices to help cover costs, citing continuing red ink due to declining first-class mail volume and the expensive mandates for retiree benefits.
The Postal Service has already defaulted on $33.9 billion in health benefit pre-payments. Left unresolved, the rapidly growing debt means that American taxpayers eventually could be forced to cover the massive costs when future postal retirees seek to cash in on the benefits to which they are legally entitled.
The Postal Regulatory Commission is making a decision on stamp pricing next month.
“Our financial situation is serious, but solvable,” Brennan said, citing an unreasonable rate cap that restricts stamp price increases to the rate of inflation. “We’re clearly looking for the PRC to establish a new pricing system for us.”
The Postal Service on Thursday reported a quarterly loss of $2.1 billion, compared to a $1.6 billion loss in the same period ending June 30 last year. That came after doubledigit growth in package delivery was unable to offset drop-offs in letter mail, which makes up more than 70 percent of total postal revenue.
Quarterly revenue came to $16.7 billion, a decline of $1 billion from the same period last year.