Postal Service Head Tells Congress: ‘We’re on the Brink of Default’

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The Postal Service’s financial woes, including massive losses and a warning that it could go broke, have led to calls for reform of the independent corporation.

Postmaster General Patrick Donahoe told the Senate Homeland Security and Governmental Affairs Committee Tuesday time is running out for Congress to pass reforms and help shore up the Postal Service’s finances.

The Postal Service is scheduled to make a mandated $5.5 billion pre-payment to fund future retirees’ health benefits. Donahoe warned the committee if legislation was not passed by Sept. 30, the Postal Service will default on the payment.

“I cannot emphasize enough the importance of action this year to help the Postal Service avoid default and insolvency,” Donahoe said in written remarks.

According to the AP, Donahoe told the committee that, absent legislation, the Postal Service could run out of money to pay salaries and contractors by August or September.

Postal officials want relief from the requirement it pre-fund medical costs. Officials also want to move to five-day-a-week delivery, cut 220,000 jobs, close 3,600 post offices and set up its own retirement fund.

Click here to watch the full committee hearing.

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