Posted on 02/20/2016 6:50:38 AM PST by Kaslin
It's far too early to say what will or won't make it to the final draft of Sen. Tom Carper's legislation to reform the U.S. Postal Service. But it is a safe bet the Postal Service's huge and growing deficit in funding for employee pensions and medical benefits will be addressed.
Ask any casual observer of the Postal Service's increasingly dire fiscal situation, and they will say the "prefunding requirements" are a big part of the problem. This may be true, but removing this obligation would not come close to addressing the Postal Service's need for reform and cannot be allowed to be passed off as a one-shot solution.
In the last round of postal reform - the Postal Accountability and Enhancement Act of 2006 - Congress established the Postal Service Retiree Health Benefits Fund. The idea was, if the Postal Service was to remain financially independent of Congress, it needed to get ahead on funding benefits and pensions so this would not threaten its viability later.
Congress required the Postal Service to pay from $5.4 billion per year to $5.8 billion per year from 2007 to 2016 to get out in front of the costs. After that, it would pay an actuarially appropriate amount each year. The plan was to have kept the pension and benefits system solvent for at least 50 years.
But the ink was barely dry on the 2006 law when the financial crisis hit. Volumes for first-class mail plummeted and, thanks to increased use of email and other digital communications, has not recovered.
As a result, the Postal Service, which was operating at break-even or better before, has lost money every year since 2007. It lost $5.1 billion in 2015 and has lost more than $51 billion since the downturn began. First-Class Mail, its most profitable product, has decreased by 27 percent since 2006 and 41 percent from its all-time high in 2001.
Its shipping and packaging businesses have grown over this time - revenues increased 14.1 percent on these products in 2015 - but this has meant higher labor costs, more wear and tear on vehicles and facilities and even more red ink. The Postal Service expects to add another $1.1 billion in compensation and benefits costs this year.
There is wide agreement the prefunding payment schedule is too high. The Postal Service maxed out a $15 billion line of credit from the U.S. Treasury making these payments in the first years of the plan, has not made a payment since 2011, is more than $50 billion in arrears now and does not expect to make its $5.8 billion payment for 2016 either.
The solution seems easy: Stop requiring the payments and you largely eliminate the red ink. The numbers look tantalizingly close - $5.1 billion in losses in 2015; $5.8 billion in missed payments to the benefits and pension funds.
And indeed, that is that path Carper has chosen.
His legislation would eliminate the requirement the Postal Service prefund its retirement benefits and cancel any outstanding payments. It would require the Postal Service to fund only 80 percent of its expected retirement costs and allow it to amortize payments over 40 years. And it would create a new Postal Service benefits program within the Federal Employees Health Benefits Program, which serves Congress and much of Washington.
It would be wise to take a look at the payment schedule, as long as Congress realizes that alone won't solve the problem of a bottom line that gets worse every year. After all, the Postal Service would have lost $10.8 billion without the prefunding requirement. And the enormity of its operation and of its responsibility to the American public demands it keep its head above water.
It pays out $1.8 billion every two weeks to its 486,000 career employees and 130,000 non-career employees, and it forms the hub of a $1 trillion shipping industry that employs 8 million people. Its 211,000 vehicles form one of the largest civilian fleets in the world. It simply can't go belly up.
On the bright side, the Postal Service still enjoys monopoly control over a lucrative part of the business – last-mile delivery to mailboxes nationwide. The U.S. Postal Service processed 155.4 billion pieces of mail in 2014 - more than 40 percent of the world's volume - to nearly 154 million delivery points in the United States.
The shipping and packaging business is growing as Americans become more and more comfortable with buying online. But it still accounts for less than half in revenues what the Postal Service earns from First-Class Mail, and the Postal Service's record on finding new business opportunities does not augur well for provisions in the Carper bill to allow shipment of alcohol by mail and entry into other side businesses.
So yes, postal reform should address the prefunding requirement. But it also must require the Postal Service to take a long look at why it is in businesses served more than adequately by more efficient private sector firms and how long that arrangement can hold.
First thing that has to be done: Audit the USPS.
Second thing that has to be done: *Force* employees to be responsible. No more scanning in the day’s load of mail in the parking lot, then chucking the mail down the nearest sewer.
Ha, I wished they would chuck all that junk mail that they deliver down the nearest sewer so I don’t have to shred it. I can do without it.
In my opinion the prefunding requirement was established to create a cash slush fund for a spending spree by congress.
They need to charge higher rates for “first class mail” that is, essentially, junk mail advertising, and which comprises the majority of mail these days. Mortgage refinance, life insurance, credit card offers...no way should that garbage be subsidized. If they can’t make a profit carrying it, then they shouldn’t do it.
I think they were trying to kill the USPS. And they’ve just about done it.
If I got my mail 2 or 3 times a week I would be fine with it. Fewer trips to the trash can that way.
Social Security has a $13.4T deficit that the government spent on Pork. With an estimate of $200T of unfunded debt many of us will not get our retirement funds.
Best plan is...stuff all public sector union employees in a gunny sack with a handful of lugnuts, and pitch it in the river!
The Postal Service has been having problems for decades.
Their problem is that they always want more money.
My Grandfather told me that everyone I met would tell me that they are overworked and underpaid.
He was right.
It may make you feel good to say “Stuff all public sector employees down a sewer”, but that doesn’t help find a solution to this problem. It will just drive public sector voters to support Bernie Sanders which is what the AFL-CIO American Postal Workers Union is doing out of desperation because the Uniparty system is supporting the TPP trade agreements. Just a thought, friend, once you start that slippery slope of cutting everyone else’s benefits, what are you gonna do when they come for yours?
A while back we got hooked w/online shopping, e,g,, amazon.com whre we liked the UPS delivery in a coupla days, etc.
Alla sudden USPS started delivering our amazon.com stuff...apparently amazon has made a deal w/USPS to deliver vice UPS!
Guess what?!
Anyone else notice???
Yeah, back to same old problems, which surely must reflect on amazon.com....hoping they catch-on soon and go back to UPS! Cannot understan why Amazon would want to be associated w/the #1 outfit for ineptness...???
of course, $$$ somewhere in da woodpile!
Semper BS!
@ Planet WTF!
*****
” Just a thought, friend, once you start that slippery slope of cutting everyone else’s benefits, what are you gonna do when they come for yours?”
You sound like a welfare queen. To you benefits are to “get” not something to “pay for”.
To me, since I have to pay for your benefits. So I want them cut.
I’ll take care of myself - and I won’t ask taxpayers to pay for my “benefits”. It would be nice if you would do the same.
I would outlaw the public employee unions.
Their pensions would be converted to a 401-K.
It depends on what you order. If it’s a large item, it will be delivered by UPS. Smaller items, the post office.
UPS and FedEx have contracted with the USPS to deliver the final mile for years.
I worked for the USPS during college as a sub carrier. Here’s how the day went:
Arrive at 8:00 Case your mail and get it ready to be distributed to the relay boxes on the route. By 8:30-45 I was done with that step. Got admonished by the regulars to slow down.
Depart for the route at 9:45 but meet all the regular carriers for pancakes and coffee (morning break). Finally head out to deliver the mail. My mistake was that I was usually finished by noon. When I showed up two hours early at the station, the union guys were very critical so I just went home or to a local bar until the proper time to go back to the barn to clock out.
Point is, the waste in hours in my case was about four hours per day. Could have done two routes in the same time frame.
Yeh!
“It depends on what you order. If it’s a large item, it will be delivered by UPS. Smaller items, the post office.”
***
But...nuthin’ too small fer them to screw up!
;)
*****
“Stuff all public sector employees down a sewerâ€,
If you’re going to quote me, get it right.
I didn’t say ‘down a sewer’. I said ...in a gunny sack and in the river.
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