Postal Service's next deadline: Aug. 1

@CNNMoney May 18, 2012: 5:29 PM ET
The next deadline for Congress to save the Postal Service is Aug. 1, when the agency won't have enough cash to make a payment into the retiree fund.

The next deadline for Congress to save the Postal Service is Aug. 1, when the agency won't have enough cash to make a payment into the retiree fund.

WASHINGTON (CNNMoney) -- The next deadline facing Congress to save the U.S. Postal Service is Aug. 1. That's when the agency won't have enough money to make a $5.5 billion payment to a retirement fund mandated by law.

No one's quite sure what happens if Aug. 1 rolls around and the Postal Service has to use all its cash on the fund to prepay healthcare benefits for retirees. But when a similar deadline loomed last year (and was pushed back by Congress), Postmaster General Patrick Donahoe predicted doom.

The last big deadline was a Postal Service moratorium on postal closures, which expired on May 15.

Since then, the Postal Service has announced new plans averting closures of rural post offices and delaying consolidations on postal plants. Only 48 plants are to be closed or consolidated in July and August this year. Other consolidations happen in 2013 and 2014 -- and could be trumped by Congress.

The Senate passed a bill last month, which would avert the Aug. 1 cash crunch. The House has a vastly different approach to resolving postal woes and doesn't appear to be in a hurry.

Postal policy veterans say they don't expect the full House to take up the bill until this summer at the earliest, which irks some in the Senate, like Sen. Thomas Carper, a Delaware Democrat.

Carper launched a website highlighting that the U.S. Postal Service loses $25 million each day Congress does nothing.

"I hope that my colleagues in the House will recognize the urgency of this situation and announce when they intend to act to save the Postal Service," Carper said in a statement on Wednesday.

The Postal Service reported a $5.1 billion loss last year citing the recession, declining mail volume and a congressional mandate to prefund retirement health care benefits.

The health care mandate is a major liability for the Postal Service. Officials have said they won't have the cash to make a $5.5 billion payment that's due Aug. 1, nor the $5.6 billion payment due Sept. 30.

So far the main cost cutting measures on the table have been consolidating plants and ending Saturday service. Unions say the health care payments are the main cause of the Postal Service's financial woes and should be eliminated instead. They say plant closures and mail service delays turn more customers away.

"Since $3.1 billion of the reported $3.2 billion loss in the most recent fiscal quarter stems from pre-funding future retiree health benefits -- which no other entity in America is compelled to do -- the USPS and congressional response ought to address the actual problem," said Fredric Rolando, president of the National Association of Letter Carriers in a statement issued Thursday.

House lawmakers did make progress this week, with a move aimed at resolving concerns from lawmakers from rural districts.

In both chambers, lawmakers from rural areas have fought to save their postal plants and offices from closing. They say the local postal office serves a far greater need to rural areas that lack Internet and faster ways to communicate more readily available in big cities.

However, measures saving any postal facility undercut cost-cutting efforts, making it tougher for the U.S. Postal Service to shrink the number of facilities and employees, an effort embraced by the House bill.

Rep. Darrell Issa, a California Republican, agreed to make a change in his postal reform bill that would limit the number of rural post offices closed to no more than 5% of all closures that happen each year.

Additionally, Rep. Adrian Smith, a Nebraska Republican who runs the House rural caucus, agreed to work with Issa to help smooth out other concerns lawmakers from rural areas may have. To top of page

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