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US Postal Service seeks reprieve from Congress to avert 'default'

Congress must act by Sept. 30 or the US Postal Service, running out of funds, will default on a $5.5 billion payment for retiree health benefits, US Postmaster General Patrick Donahue said Tuesday.

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Senator Lieberman and Sens. Susan Collins (R) of Maine and Tom Carper (D) of Delaware all underscored the urgency of the situation.

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“We must act quickly to prevent a Postal Service collapse and enact a bold plan to save its future,” Lieberman said. “Times are changing rapidly and so too must the Postal Service if it is to survive.”

Senator Collins characterized the Postal Service’s current financial status as “abysmal,” and called for far-reaching legislation to overhaul the troubled agency. She noted the critical role the Postal Service plays in the US economy, including supporting a $1.1 trillion mailing industry employing more than 8 million people in direct mail, periodicals, catalogs, financial services, and other businesses.

The White House is expected to weigh in on the issue soon. As part of a $1.5 trillion deficit-reduction package it will present in coming weeks, the White House plans to include a financial rescue plan for the Postal Service.

Nonetheless, the Postal Service’s proposals are controversial and already face opposition. Given the range of stakeholders and the partisan rancor in a Congress still smarting from the debt ceiling showdown, Gene del Polito says it is unlikely the parties will reach a consensus on the Postal Service’s proposals.

“Any other day, any other time when there isn’t this sort of partisan rancor, this issue would have been dealt with sensibly by Congress,” says Mr. del Polito, president of the Association for Postal Commerce in Washington. “This Congress can’t pass a budget, can’t pass an appropriations bill, can’t come to grips with the debt ceiling. It’s not moving forward with this postal bill.”

He said the proposal’s naysayers failed to offer an alternative approach in Tuesday’s hearing and that boded ill for the agency.

“Not one person has come forward with an appropriate remedy for the difficulty [Postmaster General Donahoe] has bought to their attention,” he says. “For Congress, if you don’t allow Donahoe’s proposals, you’re pushing the institution into the governmental equivalency of bankruptcy.”

Del Polito called the Postal Service’s proposals to scale back services and cut jobs and facilities “not a desirability, but an inevitability,” and said the agency’s goals should be self-sufficiency, not profitability.

“I think Congress has to stop calling the Postal Service a business and start talking about it as an essential element of the nation’s economic infrastructure,” he said.

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