LOS ANGELES, CA (Catholic Online) - A default on the payment for 2011 wouldn't directly affect service or its ability to pay employees and suppliers, postal officials say. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," spokesman David Partenheimer says.

The post office says it will default on its 2012 retiree health payment, also roughly $5.5 billion, which is due September 30, if there is no legislative action.

The U.S. Postal Service is in dire need of an overhaul, losing $3.2 billion in the second quarter of this fiscal year. Third-quarter results will be reported on August 9. The post office blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees.

While the Senate has passed legislation to overhaul the agency, the House says it doesn't expect to take up its own proposal until after August.

Senators voted in April, on a bipartisan basis, for legislation that largely shores up the agency's finances by returning an estimated $10.9 billion overpayment made into the federal employee pension system. Most importantly, the legislation limits the agency's ability to close postal branches and stop Saturday delivery.

Republican House leaders say they favor legislation that would require the agency to operate more like a business, in part by setting up a panel to reduce the network of post offices.

A chief backer of the House bill, Rep. Dennis Ross (R., Fla.), wouldn't consider financial relief in the Senate bill "absent wholesale reforms" that are in the House bill, said Fredrick Piccolo Jr., chief of staff for Ross. He said that there will "in all likelihood be no vote before the August recess."

The office of Sen. Tom Carper (D., Del.), one of the authors of the Senate bill, said Wednesday that "every day that is lost in passing reform legislation puts the Postal Service another step closer to collapse, and unfortunately it appears that House Leaders are prepared to let that happen."

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