Post office nears historic default

Associated Press

HOPE YEN,Associated Press

Updated: Jul 30, 2012 1:30 PM

WASHINGTON (AP) —The U.S. Postal Service is bracing for a first-ever default on billions in payments due to the Treasury. That's 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 low, the Postal Service says it will not make two legally required payments for future retiree health benefits — $5.5 billion due Wednesday, and another $5.6 billion due in September.

The defaults won't stir any kind of short-term catastrophe — post offices will stay open, mail trucks will run, employees will get paid.

But postal analysts point to longer-term harm, as the mail agency finds it increasingly preoccupied with staving off bankruptcy.

The Postal Service estimates that it is now losing $25 million a day.

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