Is the USPS About to Default on Postal Workers Benefits Payments?

By Tyler Durden on 07/19/2012 09:56 -0400

So far the beyond insolvent US Postal Service has been able to avoid outright bankruptcy simply because no major cash outflows were required by the organization. That is about to change in just under two weeks when the USPS is due to make a $5.5 billion payment for retirement accounts. The problem: the USPS does not have the money and needs a bailout. The bigger problem: the USPS needs Congressional action to authorize this latest and so far greatest USPS bailout, however with Congressional recess imminent this won’t happen. So are several hundred thousand postal workers about to go postal once they realize that (earmuffs time for all those who love chanting ideological slogans, but have yet to graduate to the abacus) math matters, and every “welfare-funding” entity in the US is ten times broke over? And maybe most importantly: just how will the postal labor union vote in the upcoming election if indeed they suddenly are denied what they had been lied to for years is rightfully theirs?

From the WSJ:

While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency’s money problems are only growing worse.

The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn’t likely, as the House prepares to leave for its August recess.

The agency said a default on the payment, for 2011, wouldn’t directly affect service or its ability to pay employees and suppliers. But “these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers,” said spokesman David Partenheimer.

The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then.

We have covered the extensive woes of the USPS before, but here they are again in summary:

Read the rest of the article here: Zero Hedge

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