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POSTAL SERVICE: MORE RED INK, MISSED PAYMENTS AS MAIL SLUMPS

WASHINGTON (AP) -- The U.S. Postal Service warned Thursday that it will likely default on up to $6.9 billion in payments for future retiree health and pension benefits for the fifth straight year, citing a coming cash crunch that could disrupt day-to-day mail delivery. 

The service said it expected cash balances to run low by October and to avoid bankruptcy would likely not make all of its payments as required under federal law. Postmaster General Megan Brennan stressed an urgent need for federal regulators to grant the Postal Service wide freedom to increase stamp prices to help cover costs, citing continuing red ink due to declining first-class mail volume and the expensive mandates for retiree benefits. 

The Postal Service is also urging Congress to provide relief from the mandate to pre-fund retiree health benefits. Legislation in 2006 required the Postal Service to fund 75 years' worth of retiree health benefits, something that neither the government nor private companies are required to do.

DYI:

U.S. Post Office the ultimate game of political football with so much blame to go around it is difficult knowing where to start.  Let’s try with a premise that is no longer controversial – due to the electronic age basic 1^st class mail is dying off only to fade into the internet sunset.  So…the Post Office will end up competing against private package delivery companies such as FedEx or UPS. 

The political football game is how best to transform this dying agency into the private sector and deal with the legacy (retired) employees.  I do agree with the mandate to prefund the pension and health care at the 100% level which is a standard of 75 years.  However, burdening the Post Office with this financial shock of aggrieves proportion knowing full well this would send this agency into massive red ink was another Congressional act of financial incompetence.  The Federal government (yes, our tax dollars) should have given the pension fund a grant to make up the difference eliminating the red ink giving the Post Office the financial muscle to maneuver from 1^st class mail to package deliveries.  Also the pension needs to be a private entity stopping Congress dead in its tracks from throwing government IOU’s into the fund as has been done with Social Security.

How will Congress deal with this agency?  Unfortunately I see more political games and good old fashion congressional incompetence costing the tax payers far more money than necessary as the Post Office transitions from 1^st class mail to package delivery.   Hopefully 600,000 plus employees will not be left out in the cold as happened to so many in the private sector with one broken contractual obligation after another.

DYI