Friday, November 4, 2011

The U.S. Postal Service's Financial Problems

A few months ago the U.S. Postal Service was in the news because of it's inability to pay a $5.5 billion health care payment, bringing to light the ugly financial situation of the USPS. As a bipartisan group of Senators propose new legislation aimed at cutting 100,000 employees, the question of the U.S. Postal Service's financial stability is once again being considered.

If you're anything like me and could use a good primer on the situation, then this video is the perfect place to start.

Watch How Should U.S. Postal Service's Financial Problems Be Fixed? on PBS. See more from PBS NewsHour.

In the video Rolando mentions, "You don't have to do 75 years worth of pre-funding in a 10-year period," and he's referring to a law Congress passed in 2006 and the reason why the USPS has a $5.5 billion health care payment due in the first place. The Postal Accountability and Enhancement Act of 2006 (PAEA) forces the USPS to fund future health care benefit payments to retirees for the next 75 years in a ten year span. This means the USPS has to pay for the health benefits of employees that don't even work for the post office yet (and the payments come directly from the operating funds). So while the USPS does need to find a business model that's more profitable for the future, the main financial burden the USPS is facing is actually because of Congress (the post office has lost $20 billion over the last four years because of PAEA).

And how does Congress want to solve this problem? By laying off over 100,000 workers of course.

Senators: Cut 100,000 postal workers:
A bipartisan group of Senators unveiled legislation Wednesday to save the U.S. Postal Service from what Sen. Joe Lieberman called a “financial death spiral” but keeps six-day-a-week delivery while slashing 100,000 employees.

Under the proposal by Sens. Lieberman (I-Conn.), Tom Carper (D-Del.), Susan Collins (R-Maine) and Scott Brown (R-Mass.), the postal service also would reduce the number of post offices and implement a number of other cost-saving options. The legislation would also prohibit the postal service from ending Saturday delivery for at least the next two years.
As the PBS video highlighted though, the USPS has overpaid $6.8 billion into the Federal Employees Retirement System (FERS) and anywhere from $55 billion and $75 billion into the Civil Service Retirement System (CSRS). Instead of laying off workers or moving towards a five day delivery week, some legislators are instead asking that this money be returned to the USPS. Of course this would make Congress' books look even worse so who knows if that will ever happen.

Some people believe this is a manufactured crisis in an attempt to eventually privatize the USPS, but there's really no way to know either way. What we do know is that there are other ways to solve this crisis (the post "How to Save the Postal Service Before It’s Too Late" has ten great examples) and maybe the people who helped get the USPS into this mess shouldn't be the people we look to now to solve it.

The fact most people don't even know the USPS doesn't use tax payer dollars though doesn't have me convinced things will end well.

1 comment:

  1. Disturbing. It's amazing how Republicans work... they know how to run a business into the ground (I think that's what half of them have as the primary job experience on their resume).


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