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Key deadlines loom for USPS

Struggling agency unsure if it can make upcoming payments

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The U.S. Postal Service, on the brink of bankruptcy, is facing two key deadlines in the coming weeks that could define its solvency and future ability to deliver the nation's mail.

The Postal Service's annual $5.5 billion payment to prepay health care costs for future retirees is due Sept. 30. And two weeks later, an estimated $1.2 billion bill for a federal workers' compensation fund maintained by the Labor Department is due.

The post office has threatened to withhold the health care payment unless Congress intervenes, saying it doesn't have the money. The agency has said it intends to make its Oct. 15 workers' compensation payment, although some on Capitol Hill question whether its precarious cash-flow problem could lead it to renege.

The Postal Service repeatedly has asked Congress for help, but there is little appetite on Capitol Hill for another taxpayer-funded "bailout."

"The [Postal Service] is fast-approaching default, and without serious reforms it will collapse and be unable to meet payroll as early as next year," said Rep. Darrell E. Issa, California Republican and chairman of the House Oversight and Government Reform Committee, in a statement released Thursday.

The Labor Department, in response to a request from Mr. Issa, said that if the post office failed to make its workers' compensation payment, the entire fund would run out of money to pay any benefits during the last four months of fiscal year 2012, which begins Oct. 1.

The Postal Service says that "absent some extraordinary circumstance," it will either make the full payment on time "or at least be able to provide enough to keep [the Labor Department] from defaulting on their obligation," spokesman David Partenheimer said.

There is no statutory penalty for not making either the Sept. 30 or Oct. 15 payment.

The Postal Service lost more than $8 billion last year because of the combined effects of the recession and the switch of much mail business to the Internet. It is expected to lose at least as much this year.

The agency in June also said it no longer could make its required $115 million Federal Employee Retirement System payments every other week. The move, which the post office said was necessary to remain solvent, is expected to free about $800 million this fiscal year.

The post office says it's doing its best to conserve cash. It has cut its staff by 110,000 over the past four years and reduced costs by $12 billion, and is considering cutting as many as 120,000 more jobs. In its 2010 annual report, the agency said it had 583,908 career employees.

The agency also has proposed eliminating delivery on Saturdays to save money and is working on closing small post offices and consolidating sorting and other operations.

"Our priorities for payments into the new fiscal year will be to make sure that employees and suppliers are paid to keep the mail moving," Mr. Partenheimer said.

Mr. Issa, an ardent advocate for Postal Service reform, unveiled legislation in June that would significantly overhaul the agency. His bill would prohibit any taxpayer-funded bailout of the Postal Service, though it would allow the agency to borrow $10 billion, with postal facilities as collateral.

The Issa measure also calls for the elimination of Saturday mail delivery.

"The American people will not accept the bailout of yet another failing institution, which is why Congress must act to put the Postal Service on a sustainable course," he said.

This story is based in part on wire service reports.

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