Post Office Nears Historic Default on $5B Payment?

The U.S. Postal Service is bracing for a first-ever default on billions in
payments due to the Treasury, adding to widening uncertainty about the mail
agency's solvency as first-class letters plummet and Congress deadlocks on ways
to stem the red ink.

With cash running perilously low, two legally
required payments for future postal retirees' health benefits — $5.5 billion due
Wednesday, and another $5.6 billion due in September — will be left unpaid, the
mail agency said Monday. Postal officials said they also are studying whether
they may need to delay other obligations. In the coming months, a $1.5 billion
payment is due to the Labor Department for workers compensation, which for now
it expects to make, as well as millions in interest payments to the
Treasury.

The defaults won't stir any kind of catastrophe in day-to-day
mail service. Post offices will stay open, mail trucks will run, employees will
get paid, current retirees will get health benefits.

But a growing chorus
of analysts, labor unions and business customers are troubled by continuing
losses that point to deeper, longer-term financial damage, as the mail agency
finds it increasingly preoccupied with staving off immediate bankruptcy while
Congress delays on a postal overhaul bill.