The U.S. Postal Service said it would default on a required annual payment of $5.5 billion into a retiree healthcare benefits fund if Congress doesn't act.
USPS officials said a default on the payment for 2011, due Aug. 1, wouldn't directly affect service or its ability to pay employees and suppliers, The Wall Street Journal reported Thursday.
However, "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," spokesman David Partenheimer said.
The Postal Service said it also will default on its 2012 retiree health payment as well -- about $5.5 billion due Sept. 30 -- if something isn't done legislatively by then.
Lawmakers likely won't take any action soon, the Journal said. The Senate has passed legislation to overhaul the agency, but the House says it doesn't expect to take up its own proposal until after August.
While everyone agrees that the Postal Service needs to be overhauled, they disagree about how to do it. USPS had a loss of $3.2 billion in the second quarter of the current fiscal year and has blamed the losses on factors such as declining mail volume and a 2006 mandate by Congress that USPS set aside billions of dollars annually for future retirees.
In April, senators approved legislation that would largely shore up the agency's finances by returning an estimated $10.9 billion overpayment made into the federal employee pension system. The bipartisan legislation also would limit the agency's ability to close postal branches and end Saturday delivery, which have been suggested as ways to help stop the flow of red ink.
Republican House leaders, however, support legislation that would require the agency to operate more like a business, the Journal said, and would include establishing a panel to reduce the number of post offices. Some House members from both parties who represent rural districts have expressed concern about potential closures in their areas.