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The US Postal Service will default on a $5.5 billion prepaid retiree health benefit payment today, and this will surely lead to calls for privatization or mass jobs cuts. But the default concerns the unusual way in which the USPS, unlike virtually any other company in the world, pre-pays its health benefits many years out. Rep. Elijah Cummings explains:
To pay for other parts of the (2006 Postal Accountability and Enhancement Act) and still make sure it remained revenue-neutral, Congress required the Postal Service to begin prefunding nearly 100 percent of its future retiree health care costs over a 10-year period.
While this may have made budgetary sense at the time, Congress did not anticipate the 2008 economic crisis and its exacerbating effects on the Postal Service’s finances, which were already struggling with declining mail volume as Internet use increased [...]
Though the Postal Service now has more than $45 billion in prepaid retiree health benefits funding, the law requires an additional $5.6 billion payment by Sept. 30, 2012.
In fact there are $11 billion in overpayments into that retirement fund. This is a ridiculous mandate on the USPS, which looks designed to send the postal service into default. This won’t immediately end mail service or anything, but it compounds the other challenges that the USPS faces from technological innovation. However, just ending this silly system of pre-funding would stave off the reckoning for many years.
There’s no reason that the Postal Service cannot bring itself out of these troubles. They provide a necessary service and hold a lot of prime real estate in every municipality in the country. But they cannot make changes to their business model without sign-off from Congress. And that has devolved into partisan rancor.
In this context, the idea of privatization has gained traction. But there are plenty of other options. Congress can allow the USPS to imitate the postal services of other countries and run a public option for simple banking, which would have benefits throughout the economy. They could let the USPS get into the broadband delivery business, which after all is the evolution of mail. Even within privatization options, there are possibilities, like running the USPS as a worker-owned co-op. Turning the still-important necessity of delivering mail over to the private market with no oversight may be the best solution for US finances, but clearly the worst from many other perspectives.
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from “Delivering For America”
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I wouldn’t call the stalemate “partisan rancor.” It is wholly the result of a calculated right wing effort to bring down much of the federal government and turn over public services to be exploited by private corporations whose record of looting is now obvious to everyone. They’re in a war against the government and the entire concept of public services, and we should stop casting this as simple political disagreement.
Even Genghis freaking Khan recognized the need for a government postal system.
It is not the postal system they are against, it is another attack on organized labor. They are united in opposition to every government program that might help minorities and civil service is one of the major ways of climbing out of poverty into the middle class.
I’m glad now I didn’t get a job with the postal service. I was gonna, but I couldn’t pass the marksmanship test. I have astigmatism.
It’s under control now.
Whilst I agree wiuth everything you say. The USPS has a pretttty nice retirement/pension plan. Compared to most everybody else.
2006 mandate- does that make this problem one that Palosi is responsible for?
One might say you are a stigmatist ;^}
It’s the Congressional decree to require the USPS to prefund the healthcare retirement benefits for the next 75 years. It’s an obvious attempt to privatize snail mail to benefit FedEx & UPS as a continuation of the disaster capitalism economic policy that our Corporatocracy has imposed on the US for the last 30+ years.
Genghis Khan was an intelligent ruler whose policies were not dictated by corporations, but designed to benefit his people.
Well you know, the USPS vs UPS false dichotomy is a fav talking point of conservatards. Just imagine UPS, admittedly as efficient as it is, taking over mail delivery — rates would skyrocket especially in rural areas.
Gee, my friend whose law firm is the lawyer for the USPS union doesn’t think the USPS future is so bright, even setting aside the bogus requirement of prefunding. He thinks the future is more complex.
Guess you know more than he does.
Isn’t the US Postal Service the most intergrated (racially & sexually and obviously geographically divergent) government agency?
So they want to kill it to make America better.
The USPS has a pretty nice retirement plan? I worked for the USPS for almost eight years as a DCS-18 level computer programmer/analyst. I had to take a disability retirement under FERS, Federal Employee Retirement System, in 1995. My disability retirement annuity from the USPS is $999/month. Out of that, I net $600 after health insurance, life insurance, and vision care is deducted. I also receive about $1425/month SSDI. So, I get a combined $2025/month retirement.
My wife worked at Walmart for nine years before they axed her for getting injured on the job. She now gets $242/week unemployment. That’s $968/month. So, we get a combined $2993/month. Deduct $1540 house payment, $320 car, $126 auto insurance, $120 electric, $85 gas, $155 TV/phone/internet bundle, food, clothes, gas for the car, etc., . . .
Yeah, I’m living like a fucking King on my USPS retirement alright.
no she took over the house in 07- my bad- this pension funding is designed to make the po go bk. the fact that democrats dont do a fucking thing about is another exaple of their political malpractice. 95% of congress belongs in prison
Trudat.
The extension & pretension of the legacy parties to give everything to the pirates for looting and the subsequent “playoffs” to congress critters in both houses & both parties needs reporting for what it is: the death rattle of an over-extended, bloated, tottering, zombie empire.
USA currently allows a cooperative arrangement between the Fed and the Chinese government to allow the “printing” of USA money. Why are such items not reported on television news?
I think the Pelosi congress took over in 2007. That said, I don’t recall these dems putting up much of a challenge.
The most obvious and glaring problem is this pre-funding obligation.
But what is most strange to me is why and how the Postal Enhancement & Accountability Act was passed in the first place. The bill had four co-sponsors, two Dem and 2 GOP, virtually no debate, and was passed by (WTF?)unanimous voice vote. As far as I recall, both the unions and Postal management were fine with it. It’s as if nobody really read the damn part about the prefunding and failed to anticipate that the USPS might not be able to pony up in times of economic distress.
Also, even absent this prefunding onus, the USPS has to start looking at their abysmally poor managers and start trimming much unneeded bloat at the top levels. They’re one of the only failing companies I know of that has upwards of 30 – count ‘em – 30 Vice Presidents. L’Enfant Plaza, their main headquarters, has 1100 souls on the payroll. If “Headquarters” disappeared tomorrow, guess what? Your mail would still go out because all postal procedures are run off a well tested and established grid. Even if – perish the thought – the joint should privatize, the WORST thing that could happen is they retain the current inefficient, inept and useless current leadership.
And if it is a nice plan, nothing wrong with that. I tired of the right approach of saying, we should things suck for them just like it sucks for you. Why not fix the shitty things so they are just as good if not better than a similar things.
Yet another of our made up crises. If I had to fund my whole retirement in ten years I’d have major cash flow problems too.
The shame of it all is that democrats fell for this nonsense in the first place.
11 billion in overpayments is based on what rate of return? Simple banking is a hilarious idea. My post office can barely handle simple stamp selling.
your right- took me a couple- of minutes to remember- i am completely disenchanted with democratic leadership so i blamed erroneously.
This behavior implies that the government is "so broken" that idealogues in House and Senate must work to break it harder and faster than it already is. Hmmm, seems rather suspicious. Who knows how poorly your car works better than the mechanic who pours sugar down your gas tank?
There’s really no appreciable difference other than the names and colors chosen by the duopoly in our uniparty system, so you weren’t wrong in assigning blame. It’s all Kabuki, all of the time.
A bipartisan effort to screw up a free lunch.
Tell me, is there any private sector corporation that funds its retirement plans 75 yrs out at 100%? Are there any human beings living on wages who do it on a 401K or self-directed IRA? My point is: if you believe in the Divinity of the Market Place and think UPS and FedEx do such a great job, can you point to a business that makes this commitment? When people want things “run like a business”–and especially when Congress-cretins say it–then I think they need to provide some models. I am certain this requirement on USPS is really backdoor way of saying “you don’t charge market rates” and if you did you could afford your retirement program. Except that I don’t think that is true–what couriers and shippers have rates that allow them to meet such a requirement?
My experience with the postal service is they are 100 percent in getting bills from large private corporations to me and 100 percent in getting payments from me to large corporations. They also have a 100 percent success ratio in getting christmas presents from me to my mother 2000 miles away. They do a simply outstanding job in getting stuff from point A to point B. And I stand by that. I don’t have a clue about their finances. How much freaking money has been delivered to large banking institutions by the postal service through the years?? I have had zero issues in nearly 30 years dealing with the postal service getting stamps or with their delivery. I think you’re lying stating they don’t know how to sell stamps to you. I’ve lived in 8 different locations and had zero issues at any of the 8 locations.
America can vote D or R, pick the corporate option for the next several years and its slow disolution to a fully undemocratic plutocracy seems assured.
Or, perhaps this is the place to force the issue.
Shut it down. Allow it to fail, and close it.
Do the Tea Party’s bidding here, and just close the postal service writ large. Don’t privatize. Don’t subsidize or create service mandates or regulate. Simply accept the right-wing ideology at face value.
Once it is shuttered, make nice speeches about how the miraculously efficient job creators will provide a better service at a better price and move on.
If rural communities, small business or older folks who still use the service don’t like the result, why then they just might want to consider their fevered ideology.
I’m slowly getting to the point that the only way America rediscovers the New Deal, is through a complete replay of the Guilded Age.
(I know, we’re there, mostly. But there are still a few stabilizers present that have yet to crumble, so the populist backlash has been muted so far.)
Anybody got any numbers on how much ending the cheap rates for junk mail would help defray this?
Gotta be substantial.
Or, we could just put the clusterfuck in Afghanistan on hold for a month, and presto! Solvency!
Put it like this: if you think postaL service is “costing us” now, wait until it gets sold to some bloodthirsty corporation.
No, I am not lying and have no reason to lie. It is not they they do not ultimately deliver the stamps into my hand. It is that the transaction takes a long time, much longer than necessary. The lines at my post office are long, perhaps supporting shorter lines at a more remote post office. But I personally have not seen short lines and have not enjoyed the benefits of them, which is why the UPS store is popular in my neighborhood.
I live in a city of 50,000 and we actually have machines now to buy stamps that even accepts credit and debit cards if you have no cash in our post office. So you don’t have to wait in any lines to buy stamps. Others may have different experiences as you said but I’ve always had a very easy time at the post office compared to UPS or FED Ex. You can pretty much buy stamps anywhere now too. If the UPS store is so popular in your neighborhood, why on earth are there long lines in the neighborhood post office would be my next question?? why would you ever even go to the post office to even know they have long lines? You have the popular UPS and you can buy stamps out of your local ATM machine now or Wal Mart or Costco or pretty much anywhere. You’ve never seen a short line at your local post office and never seen a line at your local UPS, yet you claim the UPS is popular. Someone ain’t getting the message. Lots of what you wrote makes no sense to me. It’s pretty backwards logic.
Commons……..the postal service is the largest example of “The Commons”, so the brown shirts cannot tolerate it….they want everything privatized, of course it will in the end be air and water…speak up…..
That just means everybody else should be getting better retirement packages.
Cutting jobs in a productive public service in an unemployment crisis is wrong. The mandate to pay for healthcare costs should be undone or restructured if only to avoid deepening the recession and to preserve demand. It is not “partisan rancor” when the number of millionaires in Congress is so large and real representation so broken.
With your vague comment, it is impossible to know anything. This seems out of character for you eCahn. Please give us some actual info to back up the snark.
Thanks.