The Postal Service may default for the first time in its history on August 1st, as it is unable to pay a $5.5 billion pension obligation, reports to Ron Nixon of The New York Times.That payment is a deferred obligation from last year. And another $5.6 billion payment for 2012 is due in September.
The Postal service is hemmed in on all sides, as revenue has declined along with mail volume as email and other digital communication grow. The service lost $6 billion dollars as of May, but scrapped plans to close 3,700 rural offices.
Further, the postal service is required to pre-fund retiree benefits, which helped create the circumstances of this possible default. Postal unions want Congress to relieve it of this burden.
The Senate passed a bill in April that would reduce the payment to a more manageable $2.5 billion. However, the House has yet to act.
Republican members oppose extending health care payments, and it is unlikely that they will pass a bill before the upcoming August recess.
Unless the House acts within the next couple of weeks, they will default on both.
Read more at NYTimes.com.
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