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USPS Default on Mandated $5.6 Billion Prefunded Payment

Friday, September 28, 2012

Press release from the issuing company

For the second time in two months, the U.S. Postal Service will not make a mandated payment to prefund retiree health benefits. Absent legislative action, the Postal Service is unable to make a scheduled $5.6 billion payment to the U.S. Treasury on Sept. 30. As was the case with the default of a similar $5.5 billion payment due August 1, customers can be confident in the continued regular operations of the Postal Service. We will continue to deliver the mail and pay our employees and suppliers. Postal Service retirees and employees will also continue to receive their health benefits. The health care for current retirees is paid from the Postal Service's general operating budget and is not affected by the Postal Service's inability to make the accelerated payments mandated by Congress as part of a 2006 law.

Comprehensive reform of the laws governing the Postal Service is urgently needed in order for the Postal Service to fully implement its five-year business plan and return to long-term financial stability. The Postal Service continues to encourage comprehensive legislative action in this Congress.

The Postal Service additionally remains focused on implementing significant cost reduction and revenue generating strategies that it currently has the authority to pursue.

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

 

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