Post office nears historic default on $5B payment - 13 WTHR Indianapolis

Post office nears historic default on $5B payment

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WASHINGTON -

The U.S. Postal Service is preparing for a first-ever default on billions in payments due to the Treasury. There is uncertainty about the mail agency's solvency as first-class letters plummet and Congress fails to come up with a solution aimed at addressing the flow of red ink.

Because it is short of cash, 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 losing $25 million a day.

(Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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