U.S. News

Postal Service Says Default Won't Affect Service


When you go to mail a letter on Thursday, the post office will do, well, what it always does, despite its expected Wednesday on payments of billions of dollars due to the United States Treasury.

United States Post Office
Timothy Fadek | Bloomberg | Getty Images

The post office had $5.5 billion in payments for future retiree health benefits due Wednesday and $5.6 billion due in September, but it will miss both payments because of related to the rise of email, electronic bill payments and private carriers like FedEx and UPS .

The Postal Service estimates that it is now losing $25 million every day. First class mail volume has fallen 25 percent just since 2006, the Postal Service says.

But officials want you to know that, for now at least, there’s not going to be any change in service.

“We have been reassuring our employees that a default will not affect mail operations, employee pay, etc.,” said Dave Partenheimer, a spokesman for the U.S. Postal Service. “We don’t want disrupt our normal activities due to this issue.”

And he said that the Postal Service is waiting for Congress to come to the rescue.

“We urgently need legislative action to address this issue in the current Congress,” Partenheimer said. “We also need to be able to move forward with other actions to grow revenue and save money, including 5 day delivery.”

That’s the Postal Service’s plan to cut costs by reducing services, including cutting Saturday delivery, shuttering little-used facilities, and transitioning to an independent health plan for employees. But those plans run into public resistance and complaints from members of Congress whose districts would be impacted by post office closures and job losses.

The irony is that the postal service doesn’t depend on taxpayer cash for its operations — it is self-funded — but it has to go to Congress for approval of any plans to change service levels.

Testifying before Congress in March, Postmaster General Patrick Donahoe told a subcommittee that the postal service is at a crossroads.

“Our business model is broken. We have insufficient revenue to cover our costs,” he said. “If the Postal Service were a private company, we would be engaged in Chapter 11 bankruptcy proceedings. Our financial crisis is the result of a restrictive business model and a permanent and fundamental shift away from first-class mail.”

The postal service says that it has 32,000 retail locations, but that’s likely going to change in coming years if the service is to stave off collapse.

—By CNBC's Eamon Javers and Pat Anastasi