With news reports of the U.S. Postal Service talking to restructuring advisors and being close to bankruptcy, it’s time to ask what might seem like a silly question: Are Forever Stamps really forever?
In the past two weeks, Reuters described USPS as “on the brink of bankruptcy”, the Associated Press explored what happens “in the event of a shutdown”, and the San Francisco Chronicle says postal executives are meeting with corporate “restructuring” (AKA bankruptcy) advisors.
Canceling the $2.5 billion worth of unredeemed Forever Stamps held by tens of millions of Americans is a political non-starter. The same goes for the couple of billion dollars worth of other USPS liabilities held by postal customers, such as money orders, non-Forever Stamps, and box rent.
The Postal Service would never propose walking away from those obligations, and Congress would never approve it.
But they might not be given the choice.
When a private business goes through bankruptcy reorganization, it cedes to the court control over which liabilities get paid. Unsecured creditors (like owners of Forever Stamps) are in line behind secured creditors and often end up with nothing, as you might know if you’ve ever owned a gift card for a retailer that went Chapter 11.
No one has spelled out what a “bankruptcy” or “reorganization” would mean for the Postal Service, though clearly there are thoughts in some quarters about how to void the Postal Service's labor contracts and selected financial obligations.
The point is that, whether liberal or conservative, you should be wary of any effort to present bankruptcy court as the answer to the Postal Service’s mounting debts and financial losses.
bankruptcy is exactly where the usps will go if donahoe's transformation "plan" is followed.
ReplyDeleteit almost seems as though donahoe is trying to put the post office into a death spiral of declining revenues which could never support the necessary fixed costs of the
network in place to fulfill the obligation to deliver to every address in america six days a week. donahoe's service-slashing policies have already driven many postal customers to alternative
means to communicate. it is time that postal management admits that their service cutting policies are responsible for most of the decline in first-class mail by driving customers away. keep making customers jump through hoops and make the post office more inconvenient to use and it's off to backruptcy the united states postal service will go. after bankruptcy, i'll bet you will see donahoe suddenly "hooked-up" with one of the scavenger companies that come to feed off the "remaining scraps" of the usps. the postal board of govenors and the postal regulatory commission better remove their heads from their behinds in a hurry and stop donahoe from completing his "transformation plan" which will certainly drive the post office into bankruptcy.
Seems to me like it's time for the unions to offer pay and benefit consessions. But then again these unions should also be considered public sector unions and their possition is simply that the tax payers should have to anti up to maintain their pay and benefit packages. These unions will use the comments of this is another attach on the middle class.
ReplyDeleteThose who suggest that current plans will place the USPS into a "death spiral" clearly don't comprehend that the agency has been in just such a spiral for several years and that we are nearing the bottom of the vortex; and, just like water flowing out of a funnel, this stream only increases in force and intensity as the escape route narrows with each passing day. The clock is ticking... and as a wise scholar once opined: "Time waits for no man."
ReplyDeleteIn Elmira NY stations, Employees told to let the line go out the door, , internal mail must come first, the Lobby customer comes last, so your wait in line will be a disaster during the Holidays when the traffic has increased, do whatever online, there is selective Customer Service.
ReplyDeleteit is upper management where the 6 figure salaries and bonuses are hurting the USPS, these 100 to 200k employees are non productive, and they have mismanaged the USPS into the current dire situation, the craft can be pared down by buyouts, all the other Government agencies are doing this, go tohttp://www.govexec.com/lag/?oref=topics
ReplyDeleteUSPS problems were not caused by the employees, so why is the answer to eliminate them or force concessions. The current PMG, whewn asked, stated he was not willing to take a pay cut. The former PMG left with millions of dololars of perks. So, if no one in management, and no one at the top is willing to take a hit, why should the employees who perform the core functions of the organization? The only answer these days seems to be- put the union workers on welfare and food stamps, and hire illegals to do the work. When everyone is reduced to being on welfare and foodstamps, who is going to pay for it, and who is going to buy the countries products and services? No one. That's right. Talk about a death spriral for the entire country!
ReplyDeleteDeath Spiral, Bankruptcy, the politicians have to put the absolute worst case scenario out there to the general public in order to achieve their true goal..........bust the unions, and privatize the USPS. Who gives a crap that the service will go down the toilet, and the cost of postage will go through the roof. If there is money to be made, THAT is the main concern. (Funny how all of these same politicians who are screaming for the shut down of the Post Office come crawling out of their holes to fight to keep the little post offices open in their districts)..........hypocrites.
ReplyDeleteThe money collected for money order sales is deposited into the US Treasury. If the Treasury gets to take the asset it needs to take the liability too.
ReplyDeletei just dont know where some of you people get your information i pay $5000 a yr toward my medical in 2012 it is going up tp $6000 and thats what the insurance company raise is in 2013 it will go upbecause of the provisions of the APWU contract i have a 60 mile a day commute that requires me to cross a bridge and pay a toll that plus gas comes out to another $4000 a yr i have been working 7 days a week to try to make ends meet and i am nowhere near top pay
ReplyDeleteAmid all the hyperbolic hysteria, all the 'journalists' seem to miss the fact that postage rate are the lowest in the world (next highest rate for 1st class is 11 cents higher). And the corporate mailers lobby for the lowest rates possible, but very few actually present USPS with mailings that can be processed on automation equipment, because their marketing people always want some odd-sized piece that is more ableto catch the customers eyes. So, keep bashing the workers and along with retiree healthcare prepayments and retirement fund overfunding, set us up for failure.Thanks, once again, to the corporate 'elite', who will walk away with more bonuses, and multiple payments for themselves while destroying middle-class jobs and a public institution.
ReplyDeleteTree,
ReplyDeleteIf the US Post Office went into Chapter 11, the treatment of Forever Stamps and money orders etc. in a US Post Office bankruptcy depends on what future is expected for the US Post Office. Assuming that the Post Office would be reorganized or sold as a going concern, the Forever Stamps, money orders, and similar liabilities to retail customers would be honored in the ordinary course of business. While secured lenders come before unsecured creditors, debtors typical seek certain relief on the first day of their bankruptcy cases that allows them to continue operating their businesses, e.g., paying employees, honoring customer obligations/programs, and pay taxes. As part of a typical "customer programs" motion, the Post Office would seek to perform its obligations to customers (such as Forever Stamps or money orders) because not honoring those obligations would have such a negative impact on customers' view of the post office and the likelihood they would do business with the Post Office in the future. For instance, NewPage received authorization to continue its customer programs without controversy at the beginning of their bankruptcy case.
The danger comes if the Post Office is expected to liquidate. In this case, the Post Office would have no interest in maintaining customer goodwill because the Post Office is going to cease operating in the future.
Historically, gift cards were honored in most retailers' bankruptcy cases. Recently, however, there have been a number of retailers that filed bankruptcy while in such distress that it was clear they were not going to continue operations, or be sold on a going concern basis. As a result, those debtors did not honor gift cards.
i like president bush very much but I don't see how he could have allowed the postal accountability act to happen on his watch. what sense does it make to prefund, i.e. pay for someone's health insurance, who has not even been hired yet. 75 years into the future? but then again there will be labor. always is.
ReplyDelete"...Wherefore came I forth out of the womb to see labor and sorrow..."?
as a employee of the postal service i hear all of the negative comments about the postal service from people who dont have a clue, the postal services problems stem from a carfully manipulated plan by some members of congress to basically starve the postal service of operating capital, make it insolvent,then blame it on the unions and its workers, then privatize it as a last and saving result. by forcing the postal service to pre-fund future retiree benifits for 75 yrs it has done just that. for all the employees we have witnessed just that since Bush inacted the bill to prefund retiree benefits. this cost the postal service 5.5 billion dollars a year, no other public or private organization has that sort of liability. the general public knows nothing about this they only hear that union contracts and labor cost are hurting the post office. before the prefunding bill was announced the post office was dealing with its finances just fine but in order to get your hands on a profitable business(privatize)you must demonize and devalue it to make it easy for the sharks to come in. Wake Up America
ReplyDeleteVestina: You liked President Bush very much? This man destroyed many things while in office; he also signed changes to the Family Leave Medical Act days before leaving office. These changes wiped out the protections afforded Postal employees in the original FMLA act signed by President Clinton. The USPS was free to harrass employees having permanent medical conditions after Bush signed these FMLA revisions. USPS employees are now required to have their doctors fill out paperwork every 6 months (or more frequently if the clerk in the FMLA office desires) for permanent conditions, and the FMLA clerks can deny the rights to FMLA leave on any whim they desire. They are allowed to play Doctor now, thanks to Bush. One clerk actually told employees they had to pay her $25.00 for help; her "punishment" was to be transferred to the Manager of Distribution Operations front desk where she sits every night putting on makeup and doing her nails. This type of management is what is responsible for the USPS's downfall, in addition to Bush.
ReplyDeletewho ever is talking about usps bankruptsy, just like to gain attention to their lines. they are simply using tactics of fear to gain popularity.
ReplyDeleteis it possible? yes it is. but is it a possiblility to avert bankruptsy? oh yesssss!
no time stamps, money orders will become invalid. I can bet anything on this. can we discuss such scenario...oh yes just to kick start fear adrenaline in us...