Business groups sounding postal alarms ahead of default

Congress heads home for August recess at the end of this week and it doesn't appear lawmakers will reform the U.S. Postal Service before Wednesday when it defaults on its bills. And that has business groups and lobbyists worried.

Wednesday's default, delayed from last year, stems from the Postal Service's inability to pay $5.5 billion in future retiree benefits. While the mail will still be delivered after Wednesday, the default is a blow to the confidence of many businesses who wonder if the postal service will be able to continue to deliver for them. 

Art Sackler of the Coalition for 21st Century Postal Service represents a variety of businesses and private interests, from Ebay to the Conde Nast to the Parcel Shippers Association, that are affected by the Postal Service. He calls the impending default "a psychological barrier" that "will precipitate a further loss of confidence that the Postal Service can't pull itself or be pulled out of its tailspin."

The postal service's financial woes go beyond Wednesday's default, and Sackler says this puts businesses in a tough spot as they consider moving away from the postal service to alternatives, such as Internet mailers. Many are asking "'Can we really rely on the postal system?' The uncertainties are piling up here," Sackler says. "That means more mail will be taken out of the system."

The coalition has spent $70,000 so far on lobbying this year, namely on the approved Senate postal reform bill and a House bill introduced by Rep. Darrell Issa, R-Calif.

"Our worry is that as the clock ticks, even for significant reasons, we're all edging closer to a fairly severe outcome for the postal system," Sackler says. "The sooner we can get congressional relief fully on track, the better."

The coalition wants the House to pass the Issa bill so it can go to conference with the already passed Senate version. But action before the recess seems quite unlikely, and the postal reform debate may not pick up until the fall. 

Postal issues cut across the liberal-conservative divide. On the one hand, some members from rural districts are hesitant to support the House bill because of its cutbacks to services like postal delivery, while members from heavy-union areas are worried about provisions that cut benefits.