USPS to Default on Payment for Future Retirees, Senators Call for House Action
WASHINGTON – In the face of the U.S. Postal Service (USPS) defaulting on its required payment toward its future retiree health care obligations, the authors of comprehensive postal reform legislation in the Senate today urged the House of Representatives to consider its own version of postal reform legislation quickly.
Senators Joe Lieberman, ID-Conn., Susan Collins, R-Maine, Tom Carper, D-Del., and Scott Brown, R-Mass. authored reform legislation to shore up the Postal Service’s financial solvency. That legislation passed the Senate in April, but now the House must act and allow the two chambers to reconcile the differences between the bills.
Today, the Postal Service will default on a long-deferred payment to the U.S. Treasury to fund its future retiree health care obligations. The payments are required as a result of the 2006 Postal Accountability and Enhancement Act. It is important to note that the Postal Service has reported deficits of billions of dollars even with the prefunding payment deferred, suggesting that the fiscal woes would still exist without the advance funding requirements in the 2006 law.
The current bipartisan Senate bill, the 21st Century Postal Service Act, would restructure the Postal Service’s retiree health payments by stretching more of the total obligation out over a 40-year amortized payment schedule and by moving that schedule up to start this year instead of in 2017.
“In the absence of reform legislation, the financial condition of the Postal Service continues to deteriorate to the extent that it will miss a $5 billion payment to its healthcare fund for future retirees today and is likely to miss the next payment as well,” said Senator Lieberman. “The Postmaster General is running out of options, and, unless Congress acts, draconian cuts are a certainty in the future. The Senate passed the 21st Century Postal Service Act in April. It is long past time for the House to take up its own postal legislation so that we can get the Postal Service back on solid financial footing before essential services are lost for millions of people.”
“More than three months ago, the Senate passed comprehensive postal reform by a strong bipartisan vote. Changes are needed now, but we cannot move forward without action by the House of Representatives,” said Senator Collins. “Failure to act is irresponsible and only ensures that the financial free fall of the Postal Service will continue.
“For the first time, the Postal Service will default, on a required payment to the fund that supports health care for future retirees, potentially setting the stage to break promises to current workers about their future benefits. The Senate bill ensures those promises will be kept, while still providing billions in relief by restructuring the payment plan in a responsible way,” Senator Collins continued. “The Postal Service faces a daily loss of $25 million. Without legislation, the universal mail service that drives a trillion dollar mail industry and supports more than eight million jobs will be in jeopardy. Each job lost in this fragile economy is another family tragedy. The Senate has passed a bipartisan postal reform bill to preserve the Postal Service and the critical economic activity it supports. Now it is the House’s turn. We urge the House to act now.”
“The House of Representatives has had nine months to do the right thing and fix the serious, but solvable, financial challenges plaguing the U.S. Postal Service,” said Senator Carper. “Unfortunately it appears that House Republican leaders have decided to punt on passing postal reform legislation for the foreseeable future, pushing this American institution to the brink of default for the first time in its history. My colleagues in the Senate and I came together to debate and pass a bipartisan reform bill in April. It wasn’t easy and our bill isn’t perfect, but we recognized that we had to act to save a $1 trillion mailing industry and the over eight million jobs that depend on a healthy Postal Service. While the House has delayed acting to save the Postal Service, its losses have continued to mount at the rate of $25 million a day. Every day Congress delays fixing this problem, the financial challenge grows more difficult and the potential solutions become more expensive. Simply put, continuing to delay addressing the Postal Service’s woes is fiscally irresponsible. And come midnight tonight, the Postal Service will be forced to default – further eroding confidence in its future and in Congress’ ability to provide it with the reforms it needs to save itself. That shouldn’t happen, and it doesn’t need to happen. If House Leaders will stop punting on postal reform and start voting, we can preserve the Postal Service for future generations.”
“The Postal Service’s financial situation clearly remains unstable,” said Senator Brown. “The Senate has done its part, and I urge the House to do the same, sooner rather than later. This is irresponsible and unfair, not only to the half million workers of the Postal Service, but also to the thousands of American businesses, large and small, that depend on reliable and consistent mail delivery to support their operations on a daily basis. There is universal agreement that the time for action is now.”