Postal Service About to Default Again

     As you know, the United States Postal Service (USPS) is a national business that delivers mail throughout the country for millions of citizens. It is also well documented that the USPS has been losing a lot of money in recent years due to the recent economic downturn and resulting slowdown in the amount of mail actually being sent throughout the country. If the Postal Service can not pay their $5.6 billion fee in order to pay for health care benefits for retirees, it will be the second time that the business has defaulted on a payment (the first taking place on August 1st of this year).

     As of right now, the defaulting on a payment doesn't mean much as there will be no effect on the delivery of mail, but if Congress doesn't step in by next spring, the Postal Service will actually begin to start running out of cash. No cash means that they can't pay subcontractors and mail carriers, which in turn could lead to major cuts to the mail delivery system. The article references the potential situation as the postal service "Armageddon," a highly accurate reference in my opinion. The standard mail delivery has always been six days a week, and in my opinion, maybe reducing deliveries by one or two days won't make a dramatic difference, but anything worse than that will definitely have a negative impact on our economy. 

     This whole situation was created due to a law passed by Congress in 2006 that ordered the prefunding of retiree benefits as a way of easing federal deficits a bit. Various unions are blaming Congress for this entire situation since it was their mandate that has led to the multiple defaults. During this time, Congress has made it clear that it won't help the Postal Service until after this year's elections at the earliest, and even then, it will be unlikely that they will do anything until the new members of Congress enter in January. In my opinion, Congress really needs to get their act together and settle this situation out. It feels like the longer they end up waiting for events to unfold, the worse the outcome will be for everyone.

     Currently, the Postal Service will be hoping to pull through until November for the holiday delivery rush. Until then, they may end up running out of money by mid-October, which could be disastrous for the business. In my opinion, either Congress needs to step their game up and get something done to help them out, or they better act quickly come the new year in order to settle this mess out. Until then, all we can really do is hope for the best that the Postal Service can get through all of this without too many consequences resulting.

Articles Referenced 

http://money.cnn.com/2012/09/25/news/economy/postal-service/index.html