America

USPS Defaults On $5.5 Billion Payment To Treasury

An employee loads flat trays onto a truck at the U.S. Postal Service processing and distribution center in Merrifield, Va. i i

hide captionAn employee loads flat trays onto a truck at the U.S. Postal Service processing and distribution center in Merrifield, Va.

Andrew Harrier/Bloomberg via Getty Images
An employee loads flat trays onto a truck at the U.S. Postal Service processing and distribution center in Merrifield, Va.

An employee loads flat trays onto a truck at the U.S. Postal Service processing and distribution center in Merrifield, Va.

Andrew Harrier/Bloomberg via Getty Images

For the first time ever, the United States Postal Service has defaulted on a payment to the Treasury.

The USPS warned of a default in a statement on Monday. It it would not make the $5.5 billion payment due today and that it would also default on a $5.6 billion payment due Sept. 30. Both of those payments are federally mandated and go toward prefunding retiree health benefits.

Basically, USPS said, this will not affect delivery or payments to employees. Benefits to retirees will also continue to flow.

The AP reports that the real problem here is that the USPS has proposed changes to its operation to handle its money problems, but they have to be approved by Congress, which, in an election year, is deadlocked on pretty much everything.

The AP spoke to Democratic Sen. Tom Carper of Delaware, chairman of the Senate subcommittee that oversees the Postal Service. Carper said in the short term, this means nothing.

"The real damage is to the reputation [of the Postal Service] and to the perception that mailers will have in the months ahead," Caper told the AP. The problem, he said, is that businesses might choose FedEx or UPS instead.

Federal News Radio reports that things could get ugly in October, when the Postal Service is expected to run out of cash for expenses.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: