Economics: US Post Office to Default Bigtime

In the continuing parade of overpromising benefits and underdelivering on profitability to make payments, we have the USPS which is very overextended.   The key news here is that there is a default of almost $7 Billion in payments.

Who is going to be on the hook?  The American taxpayer.

 

WASHINGTON (AP) — The U.S. Postal Service warned Thursday that it will likely default on up to $6.9 billion in payments for future retiree health and pension benefits for the fifth straight year, citing a coming cash crunch that could disrupt day-to-day mail delivery.

The service said it expected cash balances to run low by October and to avoid bankruptcy would likely not make all of its payments as required under federal law. Postmaster General Megan Brennan stressed an urgent need for federal regulators to grant the Postal Service wide freedom to increase stamp prices to help cover costs, citing continuing red ink due to declining first-class mail volume and the expensive mandates for retiree benefits.

The Postal Service has already defaulted on $33.9 billion in health benefit pre-payments. Left unresolved, the rapidly growing debt means that American taxpayers eventually could be forced to cover the massive costs when future postal retirees seek to cash in on the benefits to which they are legally entitled.

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