SAN DIEGO | Not that there was much doubt on this score, but Rep. Darrell Issa, R-Calif., this morning confirmed that Congress won’t act to head off a U.S. Postal Service default on a $5.5 billion payment into a retiree health care fund that is legally due Wednesday.
The default “will occur,” said Issa, who chairs the House Oversight and Government Reform Committee and is the lead sponsor of a USPS overhaul bill. The payment was originally due last September, but Congress pushed back the deadline until Aug. 1. Issa’s comments came in an interview after he spoke at an Association of Government Accountants conference here.
Leaders of the financially struggling Postal Service have said they lack the cash to cover both this Wednesday’s payment and a similar installment due Sept. 30.
Asked why lawmakers didn’t grant another delay on the payment due Wednesday, Issa replied: “You can only be in denial so long.”
After a year with “essentially no real reforms” and too little action to shrink the Postal Service’s workforce, he added, the result is that lawmakers are unwilling “to kick the can down the road, at least at this time.”
By the way, just because the Postal Service misses the August and September payments (cumulatively worth $11.1 billion) doesn’t mean those obligations disappear. Unless Congress decides otherwise, the agency will remain legally on the hook for them regardless of its practical inability to pay.
In a statement released today, USPS spokesman Dave Partenheimer reiterated that the mail carrier will continue to deliver mail and pay its employees and contractors. Health benefits to current retirees will not be affected.
“However, comprehensive postal legislation is needed to return the Postal Service to long-term financial stability,” Partenheimer said. “We remain hopeful that such legislation can be enacted during the current Congress.”
The Postal Service has at least one other financial management headache on the horizon: A workers comp payment in the neighborhood of $1.3 billion that’s due to the Labor Department in mid-October. In a new report, the Postal Service’s inspector general says that a $100 million cash shortfall is expected around that time. Earlier this year, Joe Corbett, the agency’s then-chief financial officer, indicated that such a shortfall could be finessed. But it’s one more chore that he and other USPS executives would presumably prefer not to have on their plates.
[This post has been updated.]