Tuesday, April 12, 2011

Here's a Real Postal Service Bailout

Brian Sheehan at Postalnews.com pointed out today that the legislative branch has an appropriation to pay the Postal Service for franked mail. Here is his commentary on the matter. So it looks as if it's the taxpayers, not the Postal Service, who are footing the Welfare for Endangered Congressmen bill. I apologize for the confusion.

You could call it Welfare for Endangered Congressmen, but it's officially known as the franking privilege.

The ability to send postage-free mail to constituents was especially popular last year with Congressmen who faced difficult elections. Of the top 10 users of the privilege, including one who sent nearly half a million dollars worth of free postage, eight were involved in difficult elections.

In fact, six lost re-election bids, Rep. Joe Sestak (D-PA) failed in an attempt to move to the Senate, and Rep. Gerry Connolly (D-VA) won re-election by fewer than 1,000 votes.

Congress members are supposed to use the franking privilege only for non-political mailings. But as election time rolls around, you can bet you'll get more newsletters from Congressman Blowhard about the wonderful things he's been doing -- especially if the opposing party has put a target on his back.

$4.87 per vote
"Some critics of this privilege claim that it gives members the advantage of free publicity in election years," writes Danielle Kurtzleben at usnews.com in introducing the top 10 spenders. She reports that the Number 1 franker last year was New Jersey Democrat John Adler, whose constituents were blessed with $487,176 worth of mailings from their representative. The ingrates gave him barely 100,000 votes and turned him out of office.

Congress provides no compensation to the Postal Service for franked mail. That means that either other mailers pay for all those newsletters in the form of higher postage rates or that USPS goes further into the red.

Some Congress members have falsely accused the Postal Service of seeking a government bailout. But with the Postal Service providing millions of dollars worth of free mail to Congress members and being forced to overpay billions of dollars to the federal government for pensions and retiree benefits, the question is: Who's bailing out whom?

And here's a question for those Congress members who advocate privatizing the Postal Service: Do you think UPS will send your newsletters for free?


Anonymous said...

It's worse than you think! Once campaign season actually begins, national and state political party organizations can then send mail on behalf of their favorite candidates at nonprofit rates---that is, at just 60% of the rate paid by commercial mailers with those very same business mailers picking up the tab for the delta; this pursuant to a provision of law added by members of congress back in 1978.

Anonymous said...

Congress now wants to balance the Postal Sevice budget on the backs of the blue collar workers. Not satisfied with APWU's new contract not wanting to cut Saturday delivery or their privledge to mail for free they continue down the road that let our government end up in its fiscal state. It is sad to see these spineless people destroy our postal service and our country just to benefit themselves!

dryMAILman said...

It's far worse than you think, and it's even worse than Anonymous thinks. We used to be able to take droopy walk-sequenced mailings directly to the street as a 3rd bundle, but now that we have a 3rd bundle of postal FSS we can no longer do this. Carriers must now spend at least an hour collating 700 pieces of franked mail into 400 delivery slots. But I'm sure FSS Phase II (FSS Lite) will be able to collate droopy flats, just give them a few more years to get the new machines up and running.

Anonymous said...

You properly point out that members of Congress abuse the franked system like many of the rest of their benes. However, I believe the USPS is reimbursed for any mail that members send under their signature. The mechanism is established and in use but is a sort of honor system.

Kenny Labbé said...

Not directly what is being discussed here, but......

USPS made $9.5 Billion profit from 2003-2006
PAEA law passed in 2006 requires Pre-payment to fund for health benefits for future retirees. 10 year plan 2007-2016. About $5.5 Billion required each year. 2007, 2008, and 2010 received FULL payment. 2009 was reduced through H.R. 22 by around $4 Billion for a payment of around $1.4B.

Bottom line the losses from 2007-2010 are around $20B, but the prepayments were around $21B, so the USPS is operationally PROFITABLE. Artificial handicap is killing us. No reason to fully fund that account by 2016. That is akin to starving your family to pay off a 30 year mortgage in just 10 years. I am retiring in 2038, so my retired health benefits will NOT be required in 2016.

Pensions. Separate issue. Two types, defined benefit and defined contribution. People hired before 1984 are CSRS, and newer hires are under the FERS system. CSRS is pension, with no social security. FERS is smaller pension, social security contributions taken out, and benefits eligible, plus a 401k type instrument called TSP.

The CSRS fund is OVER funded by about $50-75 Billion. Depending on if you believe the OIG or PRC. The OPM miscalculated, but won't fully admit it.

The FERS fund is OVER funded by about $7.5 Billion.

So you can see the USPS has been BAILING out the Federal government for some time now. Any credit for these over payments WOULD NOT be a tax payer bailout, and the funds could go directly to the pre-funding of retiree health benefits, raising THAT fund from the current estimated balance of $40 Billion to the 2016 goal of over $70 Billion, also eliminating the remaining 6 annual payments of $5.5 Billion I wrote about earlier.

The USPS has reduced employee totals from 820,000 in 2000 to around 573,000 now. I predict that in 2020, the USPS will have 425,000 employees. So employee totals have been drawn down through attrition FASTER than mail volume declines, but that is rarely mentioned.

The fact that 80% of the USPS $70 Billion in annual revenues goes to salary and benefits is NOT out of line. We are a service industry. We make nothing. What should that percentage be?? I think it is too low.

Lose $238 Billion by 2020? Really?? The USPS has NEVER lost more than $9 Billion in a single year, and have a $15 Billion debt ceiling. Pray tell, how will they be able to lose $25 Billion per year the next nine years. Seriously.

Finally (for now), the USPS says 80% of post offices are losing money. That is low. It's more like 92%. The reason is that revenue is credited at the point of entry, so large plants get all the credit, and small offices that actually deliver it DO NOT get the credit for delivering it. The smallest, rural 10,000 post offices cost the $70 Billion dollar organization LESS than $1 Billion per year. If you shut them all down, rural America will suffer unduly.

Thanks for reading.