The United States Postal Service had been hemorrhaging money ever since customers began switching to email and electronic bill pay, and there seemed to be no end in sight. But that might have changed last night, when the Postal Service defaulted on its debt of $5.5 billion.

And that’s not all. It has another $5 billion coming due in September, and the office says it can’t pay that, either. Suddenly, officials are saying that a drastic restructuring of the mail program may be necessary.

But the post office says it could all be avoided with a vote — a vote the House of Representatives is unwilling to make. Don Soifer is the executive vice president of The Lexington Institute and executive director of the Consumer Postal Council.

"None of this is going to affect the daily operation of the postal service — for now," Soifer says. 

In 2006, Congress required that the Postal Service pay $5.5 billion once a year for ten years as a mandatory prepayment for retired postal workers' health plans. 

"If they didn't have to prepay their pension, then the Postal Service still would've lost $5 billion last year, and the postal economics [would still] be in poor shape, and it's still a poor connection to the current postal business plan no matter how you look at it, but it would have provided that relief," Soifer says. 

Time is running out, however. As more and more postal service workers are retiring, the pension program will become increasingly strained. This will put even more pressure on the USPS, which has been losing money steadily since the advent of email and online bill payment. 

"Sooner or later, in this age of diminishing mail volume and diminishing revenues that the Postal Service is getting from mail volume, these are no longer going to be future payments," Soifer says. "They're going to have to find a way to pay for that one way or another, or there [are] going to be an awful lot of unhappy retirees." 

This default highlights the dire straits that the Postal Service currently finds itself in, but no simple solutions seem to be forthcoming. The closure of more remote, rural post offices would deal a blow to communities that often lack broadband internet and rely on the postal service more so than urban populations. Soifer notes that closing these smaller offices wouldn't realize much extra revenue anyways, and would damage those small towns in the process. 

"Realistically, the business plan is badly broken," Soifer says. "Any solution is going to have to address both the cost and revenue side. On the cost side, Congress is going to have to stop being part of the problem and find ways to allow the Postal Service to cut its costs to match its business plans in the ways that it feels makes sense. 

"But on this other side, the revenue side, we have this massive infrastructure around the United States," Soifer says. "We have more post offices than McDonalds, Starbucks, and Walmarts combined. We need to find ways to leverage that infrastructure to gain new revenue one way or the other, or the plan just isn't going to work."