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U.S. Postal Service Near Default – Chapter 11 Bankruptcy

The U.S. Postal Service does not have the money to meet an obligation to a retiree health care trust fund coming due at the end of the month, but if there’s a default, officials promise no interruption in the mail, the payroll, or payments to suppliers.

Commenting in response to a New York Times article Monday suggesting the Postal Service may have to shut down within months, spokeswoman Yvonne Yoerger told CNN there’s “nothing actually new in the Postal Service’s position.”

“We are required to make this $5.5 billion dollar payment into the future retiree health benefits fund, and probably won’t be able to make it when it comes due September 30th.”

The fund was mandated by a 2006 postal reform act that postal officials today believe does not match the reality of declining revenues and a smaller workforce. Tuesday, congressional lawmakers will address the matter in a hearing on postal operations.

Yoerger said at that hearing, Postmaster General Patrick Donahoe will insist that the fund be re-scaled from the days when there were 900,000 people on the payroll. The mandated funding level has not changed in the years since then, although the Postal Service has trimmed 250,000 jobs.

She said “the fact is, no other government agency, and few corporations in the private sector are required to fund retiree health benefits 75 years out.”

The newspaper quoted U.S. Sen. Thomas Carper, D-Delaware, as saying the financial problems are so dire the Postal Service may close later this year.

Full article at: http://www.cnn.com/2011/US/09/05/postal.default/

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video U.S. Postal Service Default Chapter 11 Bankruptcy billion dollar trust fund bailout fail health care unions september 30 2011 post master general postmaster lay offs unemployment trend

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