Are Postal Workers About To Go Postal On Imminent USPS Benefits Default?

Tyler Durden's picture

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:

Most everyone agrees the Postal Service needs an overhaul. It had a loss of $3.2 billion in the second quarter of this fiscal year; it is to report third-quarter results on Aug. 9. The agency blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees. But while the Senate has passed legislation to overhaul the agency, the House says it doesn't expect to take up its own proposal until after August.

 

The two sides remain far apart. Senators voted in April, on a bipartisan basis, for legislation that largely shores up the agency's finances by returning an estimated $10.9 billion overpayment made into the federal employee pension system. The legislation limits the agency's ability to close postal branches and stop Saturday delivery.

 

Republican House leaders support legislation they say would require the agency to operate more like a business, in part by setting up a panel to reduce the network of post offices. Some rural-district House members, from both parties, have been worried about closures in their areas.

And here is where we should pay attention, because if the muppets are unable to come to terms over a modest payment which would ensure a key union vote swing in either direction, what does that leave for the fiscal cliff at the end of the year, which as everyone knows by now, is economic armageddon for the country unless at least partially resolved?