WASHINGTON, DC -- The Postal Service is facing a financial crisis, poised to default today on an important debt to the government.
The U.S. Postal Service is losing money and the situation is growing more serious by the day. That's something Postmaster General Patrick Donahoe
acknowledged on Capitol Hill this spring.
"We've got to get our finances stabilized. The quicker we act and get ourselves back on firm financial footing, the better for the industry."
If Congress doesn't act by today, August 1, the service will default on a $5.5 billion payment to the federal government to cover retiree health benefits.
It would be the first default in its more than 200-year history.
"The postal service has said they're going to continue to pay its employees and they're going to continue to pay their bills and pay their subcontractors. So in some respects this default is largely symbolic," explains Jennifer Liberto of CNNMoney.com.
"But it does highlight that there is a crisis here?"
"Correct and as they move towards September where they have to make the second payment, we're getting towards a point where they're really going to run out of cash eventually to even meet their basic needs," Liberto says.
Losses from a sluggish economy and the growing number of people paying their bills online have forced the service to tap a nearly $13 billion Treasury Department loan to make ends meet.
The service has a plan to cut costs by $22.5 billion by 2016 and return the service to profitability.
It's already shutting down some processing plants and has offered retirement packages to thousands of employees.
It's also cutting hours at some post offices and wants to end Saturday service.
Unions want to reduce the money set aside for health benefits and don't want to see services cut.
"I think there's gotta be some closings and consolidation," acknowledges Cliff Guffey with the American Postal Workers Union. "That's modernization. It just doesn't need to be as draconian and as quickly done (as is what is necessary right now)."
The Senate has passed legislation to help shore up the service's finances.
But the House has yet to act, despite Donahoe's warning about what will happen by October of 2013 without help.
"We would be out of cash as it stands now. I would strongly encourage Congress to move now," he said.
The postal service, and postal workers, are still waiting.
If and when Congress acts, consumers can expect to see changes.
The Senate bill would eventually allow the Postal Service to end Saturday delivery after two years of study, while the House bill would let them do so right away.
(Athena Jones, CNN)
The U.S. Postal Service is losing money and the situation is growing more serious by the day. That's something Postmaster General Patrick Donahoe
acknowledged on Capitol Hill this spring.
"We've got to get our finances stabilized. The quicker we act and get ourselves back on firm financial footing, the better for the industry."
If Congress doesn't act by today, August 1, the service will default on a $5.5 billion payment to the federal government to cover retiree health benefits.
It would be the first default in its more than 200-year history.
"The postal service has said they're going to continue to pay its employees and they're going to continue to pay their bills and pay their subcontractors. So in some respects this default is largely symbolic," explains Jennifer Liberto of CNNMoney.com.
"But it does highlight that there is a crisis here?"
"Correct and as they move towards September where they have to make the second payment, we're getting towards a point where they're really going to run out of cash eventually to even meet their basic needs," Liberto says.
Losses from a sluggish economy and the growing number of people paying their bills online have forced the service to tap a nearly $13 billion Treasury Department loan to make ends meet.
The service has a plan to cut costs by $22.5 billion by 2016 and return the service to profitability.
It's already shutting down some processing plants and has offered retirement packages to thousands of employees.
It's also cutting hours at some post offices and wants to end Saturday service.
Unions want to reduce the money set aside for health benefits and don't want to see services cut.
"I think there's gotta be some closings and consolidation," acknowledges Cliff Guffey with the American Postal Workers Union. "That's modernization. It just doesn't need to be as draconian and as quickly done (as is what is necessary right now)."
The Senate has passed legislation to help shore up the service's finances.
But the House has yet to act, despite Donahoe's warning about what will happen by October of 2013 without help.
"We would be out of cash as it stands now. I would strongly encourage Congress to move now," he said.
The postal service, and postal workers, are still waiting.
If and when Congress acts, consumers can expect to see changes.
The Senate bill would eventually allow the Postal Service to end Saturday delivery after two years of study, while the House bill would let them do so right away.
(Athena Jones, CNN)
