Saturday, October 8, 2011

Why Are the Postal Service's Financial Problems Such a Surprise?

The U.S. Postal Service's financial problems have, of course, been big news lately, but they should hardly be a surprise.

It didn't take a genius to see this coming; here's what appeared in Dead Tree Edition almost two years ago:

"Although the Postal Service is on track to become insolvent within a couple of years, Congress has shown no appetite for wrestling with the problems that vex the USPS. The Postal Service's requests to stem the financial tide -- by eliminating Saturday delivery and eliminating the prepaid retiree-benefit requirement, for example -- will inevitably lead to a Congressional discussion of whether postal rates should be raised."

USPS is still trying to eliminate Saturday delivery and the prepaid retiree benefits. And recent Obama Administration support for a one-time higher-than-inflation-rate increase in postal rates (See Obama Supports Postage Increase: Is He Dissing the Print Industry?) means Congress is indeed likely to discuss raising postal rates.

That article from two years ago, by the way, was about the idea of letting the Postal Service conduct national lotteries as a profit-making venture. ("Look, Marge, I won a hundred Forever Stamps!") I haven't seen that idea come up in recent Congressional discussions. But it just might.

One good thing about all the political and mainstream-media attention being paid to the Postal Service's finances is that it's finally bringing to light how Congress has made a mess of the agency's finances.

Perhaps the best "ah-hah" MSM commentary was published yesterday by Bob Sullivan, a consumer-affairs reporter for MSNBC, in explaining that USPS is not looking for a bailout:

"In fact, it's the Postal Service that’s currently bailing out the U.S. government. Politicians have been raiding Postal Service revenues for years, using them to make the federal deficit appear smaller than it really is. The fiscal gyrations are so twisted that the Postal Service is right now forced to pre-pay health care benefits for employees the agency hasn't even hired yet — in fact, for many future employees who haven't even been born yet — all to artificially shrink the federal deficit. It's these crushing accounting tricks, not the cost of delivering mail, that has pushed this 200-year-old institution to the brink."

By the way, that's not much different -- but, frankly, better written -- than what Dead Tree Edition published in September 2009:

"The billions of dollars the Postal Service pre-pays every year into a retirement-benefits fund have nothing to do with retirees and everything to do with making the federal deficit look smaller. Congress is playing an accounting shell game, with the cost of the payments being passed along to mailers in the form of higher rates. That has made mailed products increasingly uncompetitive with such electronic substitutes as email and Web sites, leading to volume decreases and excess capacity in the postal system."

Related articles: How Congress Bankrupted the Postal Service in 3 Easy Steps and How USPS Could Bypass Congress on Saturday Delivery.

13 comments:

Anonymous said...

BINGO!!!!!!!!!!!!
This is all politics and about crushing union workers. And for all those union bashers just remeber when you call 911 those fire fighter,police,hospital workers are all union worker who you put your life in the hands of. Being part of a union is not some shameful thing....unions built this country!

Anonymous said...

In Addition to the 2006 Postal Reform Act with it's 5.5 billion dollar prefunding requirement there is something else to consider. FERS began Jan 1984. Fast forward the required 30 years to retire and you arrive at Jan 2014 at which point retiring Postal FERS employees will be entitled to collect over $700/month for the Social Social supplement. The Office of Personal Management has no intention of paying this money! This also explains the "White Papers" recently submitted to congress asking to remove Postal Employees from FERS so again the OPM does not have to pay the SS supplement to the federal govts largest group of retiring employees.

dryMAILman said...

Ever worsening work conditions, an aging workforce, and forced carrier overtime are killing the USPS. If nothing changes, we will have a massive unfunded liability.

Anonymous said...

this is so correct. by taking over it's own health benefits, the goverment would have to give back 300 billion. since the gov't can't increase their own deficit by giving in to the self health benefits, it will have to give in and grant 5 day delivery.

Yohan777 said...

What is all the Bull from the GOP and the Corrupt PMG?,
Trillions for bailouts that never reached the upper lower class, the inflated balloon called the economy which any day will collapse, and they cannot spare a few billion, or raise the stamps and products ?, the USPS was to bind together the Nation and still serves that purpose, changes should be made, the corrupt management of the USPS said run it like a business not a service, well it is by law a service, and the inept PMG and his inept management, together with union contracts that are agreed to but always broken, EEO and other cash cow settlements (USPS likes to promote abusive, hostile workplace),and add Congress as inept as they are ( especially the Issa GOP), and we have a made to order disaster, take a few Billion, offer a year of severance Pay with a VERA, voluntary early retirement, alleviates the excessing of craft employees and management, and gives those not eligible to go, more time, and the USPS flexibility, but common sense is not part of this solution, so when you can go, depending on Congress and the two Postal Bills, HR1351, and HR? Employee Friendly Bill , Go!, VERA, a good incentive, what is so hard to understand?.

Anonymous said...

Twisted government accounting behind Postal Service woes....
...You might have heard that the United States Postal Service is in trouble: that it's losing billions, that it will have to end Saturday service and close branches — and most inflammatory, that it might need a government bailout.

In fact, it's the Postal Service that’s currently bailing out the U.S. government. Politicians have been raiding Postal Service revenues for years, using them to make the federal deficit appear smaller than it really is. The fiscal gyrations are so twisted that the Postal Service is right now forced to pre-pay health care benefits for employees the agency hasn't even hired yet — in fact, for many future employees who haven't even been born yet — all to artificially shrink the federal deficit.

Anonymous said...

Your article should be front page on every newspaper in America. Of course if that did happen the government would try to shut them down like Gibson Guitar. Sorry I cant give a ID name because I am a Postal employee and would be fired for expressing my opinion.

Anonymous said...

SURPRISED???

80% is labor related in the USPS but that consists of all the workers from the PMG all the awy down to a clerk and carrier.

What about 45 VP's and the layers of management under them making $100,000.00 all the way to $800,000.00.

I wonder how much of the 80% they cost.

John McCormick said...

The whole discussion for the next election is being set up by main stream media to center around the creation of jobs. How does this play out in light of the congressional disposition towards the destruction of the Postal Service and the constriction of decent paying positions therein?

Anonymous said...

BINGO - what the heck does your reply have to do with this subject? Please take your rant somewhere appropriate???
John - there are NO jobs to be created in the USPS - their volume is down to the point where they simply must reduce their workforce, even if they get the concessions which they truly deserve. We don't need more government jobs anyway, we need private sector jobs.
Steven

Anonymous said...

AND UNIONS WILL NOW KILL THIS COUNTRY. THEY ARE NO LONGER NEEDED

Anonymous said...

Steve, first class volumes may be down, but all other types are increasing; they never tell what they bring in! The high cost of labor includes the huge salary and benefit pkgs enjoyed by the top execs. Potter jumped ship with a bundle. Clerk and carrier jobs have been cut to the bare bones and overtime is costing millions. Contract violation grievances and law suits are costing billions. Closing offices that still have a leases with the PO is costing millions. The PO has been run with inept management and it's time to fire them all and end their party.

Anonymous said...

This article is right. One other thing to consider.. In the 90's barcodes were going to make the mail better. I have yet to see it make the mail better. It has and I have proof made it worse. Now we are getting the IMB - they are spending millions to get it working. Not to mention the forcing us to spend to use it. They need to stop spending and perfect what they have without new machines ect that don't make the mail any better than what it was before barcoding.