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Postal Service Close to Default

Photo: Alexander Marks

The U.S. Postal Service announced Friday it continued to lose money in fiscal 2011 and could be forced to default on payments to the federal government absent congressional action.

USPS had a net loss of $3.1 billion in the third quarter of fiscal 2011. Net losses for the nine months ending June 30 amount to $5.7 billion.

International Business Times reports the most pressing issue USPS is working to reshape is the $5.5 billion annual prepayment to the federal government for retiree health benefits, due Sept. 30.

“We are experiencing a severe cash crisis and are unable to continue to maintain the aggressive prepayment schedule,” USPS CFO Joseph Corbett said. “Without changes in the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September.”

The Hill reports USPS is seeking congressional intervention to avoid a default. There are four legislative proposals in Congress to help USPS deal with its financial issues, including the ending of Saturday mail delivery. USPS is seeking to move to five-day delivery.

USPS is currently studying 3,700 post offices for possible closure as a way to save costs.

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