# USPS owes $5.5 bil. to the government and can't pay. What happens next to the USPS? **URL:** \ **Category:** Factual Questions\ **Created:** [August 1, 2012, 10:28pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109 "2012-08-01T22:28:15Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![steviep24](https://avatars.discourse-cdn.com/v4/letter/s/5f9b8f/32.png) [@steviep24](https://boards.straightdope.com/u/steviep24)\ **Post date:** [August 1, 2012, 10:28pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/1 "2012-08-01T22:28:15Z")
What could happen to the postal service if they can’t pay the $5.5 billion to the federal government? [Story here](http://abcnews.go.com/Business/postal-office-nears-default-close-year/story?id=14449522#.UBmru_ZlTdw) Note to moderator: Please edit dollar amount in title to $5.5 bil. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 1, 2012, 10:43pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/2 "2012-08-01T22:43:27Z")
A bailout, a reorganization of some kind, receivership. Basically, whatever Congress wants to happen to them. It is unlikely that the government will permit the mail system to fail entirely. ---
**Author:** ![Procrustus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/procrustus/32/2994_2.png) [@Procrustus](https://boards.straightdope.com/u/Procrustus)\ **Post date:** [August 1, 2012, 10:44pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/3 "2012-08-01T22:44:39Z")
Beats me. But that story is almost a year old, so i guess they worked it out. Got my mail delivered today as usual. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 1, 2012, 10:45pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/4 "2012-08-01T22:45:29Z")
Note that a big reason that the USPS is having problems is because unlike any other government agency or company, it is forced by law to prefund its retiree health benefits and pension. The reason is that this prefunding makes the federal deficit look smaller. In other words, a big chunk of the financial problems at the USPS (although certainly not all of its problems) are artificial. See this article by Joe Nocera in the New York Times about this. ---
**Author:** ![steviep24](https://avatars.discourse-cdn.com/v4/letter/s/5f9b8f/32.png) [@steviep24](https://boards.straightdope.com/u/steviep24)\ **Post date:** [August 1, 2012, 10:54pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/5 "2012-08-01T22:54:08Z")
> [@Procrustus](#): > > Beats me. But that story is almost a year old, so i guess they worked it out. Got my mail delivered today as usual. Ooops! I posted a link to an old story by mistake. Since I just saw this on the news today I’ll post a new link. [story](http://money.cnn.com/2012/07/31/news/economy/postal-service-default/) ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [August 1, 2012, 10:58pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/6 "2012-08-01T22:58:53Z")
The US government doesn’t have the money to pay Social Security or its other creditors all the trillions it has borrowed? What happens? Same thing. Congress votes for approval to borrow the money. The Constitution requires that the US not default on its debts and pensions. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [August 2, 2012, 5:30pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/7 "2012-08-02T17:30:15Z")
> [@The\_Second\_Stone](#): > > The US government doesn’t have the money to pay Social Security or its other creditors all the trillions it has borrowed? What happens? Same thing. Congress votes for approval to borrow the money. The Constitution requires that the US not default on its debts and pensions. And if congress chooses to ignore the constitution? Leaving the default aside, apparently the USPS will run out of operating cash sometime next winter or early spring. I gather that will be fine with the tea partisans. I assume AMTRAK will be shutting down soon for similar reasons. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [August 2, 2012, 5:45pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/8 "2012-08-02T17:45:43Z")
> [@The\_Second\_Stone](#): > > The US government doesn’t have the money to pay Social Security or its other creditors all the trillions it has borrowed? What happens? Same thing. Congress votes for approval to borrow the money. The Constitution requires that the US not default on its debts and pensions. > [@Hari\_Seldon](#): > > And if congress chooses to ignore the constitution? Leaving the default aside, apparently the USPS will run out of operating cash sometime next winter or early spring. I gather that will be fine with the tea partisans. I assume AMTRAK will be shutting down soon for similar reasons. So what? I don’t have the hundreds of thousands to pay my mortgage either. But I do make enough money to pay the interest and a bit of principal, so nobody is coming after me… (yet). The government will have to make a decision - do they need a post office or not? Nobody in the civilized world has decided to abandon their post office yet that I’ve heard of. Likely, the government will assume or forgive the adequate amount of debt, the PO will do some belt tightening (no Saturday delivery?) and the PO will carry on. For example, if there are Saturday deliveries, or places where there are 2 deliveries a day (business districts?) that might be stopped. In Canada, for the last 20 years or so, any new subdivisions have superboxes; instead of door-to-door delivery, there are large multi-mailboxes by the curb about every block. This speeds the delivery, the whole block can be delivered out of a truck with one stop. The Canadian PO has also done a lot of out-sourcing. many offices have been replaced by contract locations (cheaper labour), a counter in a corner of a drug store or other place. ---
**Author:** ![Sunspace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunspace/32/1250_2.png) [@Sunspace](https://boards.straightdope.com/u/Sunspace)\ **Post date:** [August 2, 2012, 5:54pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/9 "2012-08-02T17:54:39Z")
Not that the Canadian post office [isn’t pondering its future also](http://www.theglobeandmail.com/report-on-business/canada-post-pushing-the-digital-envelope/article4106281/)… ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 2, 2012, 6:37pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/10 "2012-08-02T18:37:19Z")
> [@steviep24](#): > > What could happen to the postal service if they can’t pay the $5.5 billion to the federal government? “The check’s in the mail, I swear!” ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [August 3, 2012, 3:04pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/11 "2012-08-03T15:04:19Z")
Seriously, people. Nobody wants to see the Postal Service collapse. Odds are probably better than 90% that Congress will pass a measure providing some sort of bailout or relief. The odds that the government will force a bankruptcy over the unpaid debt are only barely above 0%. ---
**Author:** ![SCSimmons](https://avatars.discourse-cdn.com/v4/letter/s/e495f1/32.png) [@SCSimmons](https://boards.straightdope.com/u/SCSimmons)\ **Post date:** [August 3, 2012, 5:45pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/12 "2012-08-03T17:45:22Z")
I find the political wrangling over the USPS to be always entertaining. One month, it’s “The USPS is losing money and needs a bailout,” and everyone’s outraged and demanding efficiency improvements. Then, the next month the USPS comes out with their analysis of how to make ends meet, canceling Saturday delivery and closing 20% of the post offices, and now the torch-and-pitchforks are out again: “How dare you reduce services? My local office has been open all my life, you’re not allowed to close it!” Nobody seems to want to pay for it, but nobody wants to settle for the services that they can economically provide either. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 3, 2012, 6:03pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/13 "2012-08-03T18:03:08Z")
> [@Diceman](#): > > Seriously, people. Nobody wants to see the Postal Service collapse. Odds are probably better than 90% that Congress will pass a measure providing some sort of bailout or relief. The odds that the government will force a bankruptcy over the unpaid debt are only barely above 0%. There was a time when a debt-ceiling raise was pro forma, too. These days, though… Of course, that’s delving into GD territory. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [August 4, 2012, 7:29am UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/14 "2012-08-04T07:29:39Z")
> [@md2000](#): > > In Canada, for the last 20 years or so, any new subdivisions have superboxes; instead of door-to-door delivery, there are large multi-mailboxes by the curb about every block. This speeds the delivery, the whole block can be delivered out of a truck with one stop. That’s also the case in the US, and I expect in many other countries. But they aren’t retrofitting any older neighborhoods with those, so there are still many places with individual mailboxes. ---
**Author:** ![voltaire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voltaire/32/313_2.png) [@voltaire](https://boards.straightdope.com/u/voltaire)\ **Post date:** [August 4, 2012, 9:34am UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/15 "2012-08-04T09:34:27Z")
> [@Dewey\_Finn](#): > > Note that a big reason that the USPS is having problems is because unlike any other government agency or company, it is forced by law to prefund its retiree health benefits and pension. The reason is that this prefunding makes the federal deficit look smaller. In other words, a big chunk of the financial problems at the USPS (although certainly not all of its problems) are artificial. See [this article](http://www.nytimes.com/2012/07/31/opinion/nocera-its-d-day-for-the-post-office.html) by Joe Nocera in the New York Times about this. You beat me to saying this, but at least I can add an \*essential \*detail that illuminates the absurdity of the whole thing. So, to add to your sentence: Unlike any other government agency or company, it is forced by law to prefund its retiree health benefits and pension **for a period of 75 years.** Think about that and let it sink in for a bit. **75 fucking years** is a loooong time to prefund the health benefits and pensions for **a shitload** **of employees.** ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 4, 2012, 10:01am UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/16 "2012-08-04T10:01:04Z")
What exactly does it mean to have pension benefits prefunded? Does that mean “figure out how much we’ll have to pay in pension benefits over the next 75 years, and have that amount of cash sitting in a bank account right now?” If so, that’s pretty dumb. ---
**Author:** ![rogerbox](https://avatars.discourse-cdn.com/v4/letter/r/76d3ee/32.png) [@rogerbox](https://boards.straightdope.com/u/rogerbox)\ **Post date:** [August 4, 2012, 12:50pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/17 "2012-08-04T12:50:50Z")
> [@friedo](#): > > What exactly does it mean to have pension benefits prefunded? Does that mean “figure out how much we’ll have to pay in pension benefits over the next 75 years, and have that amount of cash sitting in a bank account right now?” > > If so, that’s pretty dumb. That’s exactly what it means. If Republicans did not force this onerous regulation (which they CLAIM all the time to hate), then USPS would be profitable this year instead of facing budget shortfalls, and post offices would not have to close in rural areas. The Post Office has to have cash in hand NOW for retirement for PEOPLE WHO HAVEN’T BEEN BORN YET. Think about that for a second. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [August 4, 2012, 4:04pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/18 "2012-08-04T16:04:55Z")
> [@Diceman](#): > > Seriously, people. Nobody wants to see the Postal Service collapse. Odds are probably better than 90% that Congress will pass a measure providing some sort of bailout or relief. The odds that the government will force a bankruptcy over the unpaid debt are only barely above 0%. Yes. UPS and Fedex, both big GoP supporters, do. [http://www.irregulartimes.com/fedexupsbush.html](http://www.irregulartimes.com/fedexupsbush.html) In fact this is one of the reasons the GoP came up with this new crap regulation. ---
**Author:** ![Flyer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/flyer/32/7298_2.png) [@Flyer](https://boards.straightdope.com/u/Flyer)\ **Post date:** [August 4, 2012, 4:13pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/19 "2012-08-04T16:13:59Z")
> [@voltaire](#): > > You beat me to saying this, but at least I can add an \*essential \*detail that illuminates the absurdity of the whole thing. > > So, to add to your sentence: > Unlike any other government agency or company, it is forced by law to prefund its retiree health benefits and pension **for a period of 75 years.** > > Think about that and let it sink in for a bit. **75 fucking years** is a loooong time to prefund the health benefits and pensions for **a shitload** **of employees.** I have mixed feelings about this. Yes, it’s absurd–and yet, on the other hand–the last 20 years or so have shown us that if entities of any stripe have the option of putting off payments to a pension fund, they will almost invariably do so. After all, the pension obligations seem a long way in the future, whereas that money “needs” to be used now for roads, teachers, etc. > [@](#): > > Corporate and public pension funds across the country are seriously underfunded, threatening the retirement security of workers and straining the financial health of state and local governments, according to a pair of independent studies. > **[Pension funds seriously underfunded, studies find](https://www.latimes.com/business/la-xpm-2012-jul-17-la-fi-pension-shortfalls-20120718-story.html)** > > Pension funds seriously underfunded, studies find [http://online.wsj.com/article/SB10001424052702304441404577483021888092422.html](http://online.wsj.com/article/SB10001424052702304441404577483021888092422.html) > **[The Underfunding of State and Local Pension Plans](https://www.cbo.gov/publication/22042)** > > CBO discusses two approaches to calculating the present value of a plans liabilities. > **[Federal Reserve Bank of Cleveland](https://www.clevelandfed.org/)** > > The Federal Reserve Bank of Cleveland supports the US economy and our region by studying economic conditions and issues that impact our communities, serving financial institutions, and providing economic education and resources for all. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 4, 2012, 4:23pm UTC](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109/20 "2012-08-04T16:23:48Z")
That’s true, but according to the NYTimes column I mentioned, the USPS pension plan is currently over funded by $11 billion. In 2002, it was overfunded by $71 billion. And according to [this USPS report](http://about.usps.com/publications/pub100/pub100_060.htm), the Postal Civil Service Retirement System Funding Reform Act of 2003 “also created another challenge for the Postal Service: it transferred to the Postal Service from the Department of the Treasury the responsibility for funding military pensions of current and former postal employees, amounting to $27 billion in costs transferred from taxpayers to postal ratepayers.” In other words, underfunding of the USPS pension plan is not an issue here. [Next page](https://boards.straightdope.com/t/usps-owes-5-5-bil-to-the-government-and-cant-pay-what-happens-next-to-the-usps/630109.md?page=2)