All right, good points. UPS then appears slightly tilted to GOP, but FedEx is pretty strongly GOP. They also spent a scad on lobbying, esp on the H.R.658: Orphan Earmarks Act.
http://www.opensecrets.org/orgs/summary.php?id=d000000089
In any case, the GOP wants the American Postal Worker’s Union out of business.
And there are quite a few of us who wouldn’t be terribly upset were Darryl Issa to DIAF.
It doesn’t HAVE to be a fire, if another method is more likely and/or convenient.
Pension benefits are a real expense. Excluding one expense and saying that if it was not for that the USPS would be profitable is true but meaningless. The USPS has negotiated pension benefits with its unions and can either pay them out of current revenues, pre-pay, or default. The problem with paying them out of current revenues is that revenue has been declining since 1998 and there is no way the revenues in the next ten years are going to be able to cover the pension promises. Thus the alternatives are to pre-pay as much as possible or default. Either the taxpayers are going to have to pay for the pensions shortfall, or the retirees are going to have to take less. The retirees have a better union so I think the odds are that most of the shortfall will fall on the taxpayers. Thus congress tried to limit as much as possible the future liability their constituents have. That is not a conspiracy, that is foresight.
The problem the USPS has is political. They are required by law not to raise prices more than inflation, but their primary expenses, labor and fuel are rising. Meanwhile, email has destroyed their primary business line. They are unable to close poor performing branches without permission of congress, yet congress has every incentive to require them to keep them open. Their business model is unsustainable.
The point is that a real business makes decisions about how to fund its business and the mechanisms by which they report that funding. Private companies play accounting tricks every day of the year to make their bottom lines look better.
I disagree that Congress simply limited future liability as a positive. They could change the requirement to something reasonable and in line with other companies without any danger to the taxpayers. If they made the time period, say, 50* years tomorrow the USPS would suddenly be in the black and we wouldn’t be having this discussion but nothing else would change. That’s a political decision, not a business one.
*made-up number
Prepayments don’t have anything to do with profitability. They are strictly a cash flow issue. The USPS is incurring an expense by compensating their employees with the promise of future health care and pensions. That is on the balance sheet regardless of whether the USPS puts aside money to pay that expense or not.
What is a “poor performing branch” of the post office?
OK, so I can see how prepayments can make sense… But why 75 years? Wouldn’t it make more sense just to pre-pay, say, their current employees?
One of the arguments against the efficiency of government-run services is their susceptibility to political intervention. Now, in terms of the funding of employees not yet born, it’s a ridiculous argument since the meddling has no other political purpose other than to bring down the USPS.
But the keeping open of unprofitable postal centers/limiting delivery schedules is another story. One could argue that it is a governmental duty to keep them open, but that does nothing to argue for its efficiency. I don’t think the argument is that all postal employees and administrators are inefficient, rather that the system as a whole is.
I don’t buy it myself: the system would be in the black if not for the completely onerous and arbitary prefunding requirements. But it is not necessarily always a losing argument to point to political interference when claiming that a governmental service is inefficient, because that’s one way in which they are claimed to be inefficient.
But I would be interested in examples of individual congresspeople who are against the USPS as a whole but fought to keep their local branches open. That would be some juicy hypocrisy.
I’m not sure where 75 years comes from. My understanding is that they are doing exactly what you say makes sense. They are supposed to accumulate enough assets by 2017 to pay for the pension benefits they are currently obligated to pay. After then, they are supposed to put aside enough money each year to pay for pension obligations that they incur in that year.
The best way to look at it is that for decades the Post Office has been paying it’s employees X dollars per year and giving them an IOU for Y dollars. Prepayments are putting money in an account to pay those IOUs.
ETA: which isn’t to say that many people don’t blame mostly the workers (and their unions) for the inefficiency.
It comes from a law.
That’s a progressive site, but those facts appear accurate.
This is wrong, according to that article. If they could do this, there would be no crisis.
I looked at the actual law and it says
It doesn’t say anything about 75 years.
Presumably that would be the branches which don’t meet a threshold ratio of customers to population density in the zip code(s) represented. There are lots of small post offices in cities, especially, that are no longer convenient thanks to limited hours, location, lack of parking, and the like. Some close for 75 minutes midday because they have only one worker and they need a lunch break.
The sad thing is that the people who most use those branches are the ones for whom it would be difficult to get to others. But that’s the case for pretty much any poor performing retail/service location.
You accidentally missed quoting part of the law, let me fill that in for you.
It’s only $56 billion you skipped over, I’m sure it’s nothing.
What in the world are you talking about? I didn’t skip over it. What you quoted is the part of the law that says:
That $56 billion is an estimate of the net present value of future obligations that the USPS will have in 2017. In other words, it’s a savings account to pay the IOUs the USPS has already written.
I don’t see where the 75 year number comes from. This doesn’t necessarily mean the implication is not there, but let’s assume that’s wrong. I also described the liability earlier as pensions: it is health care. My mistake.
If the sources are wrong, then let’s dismiss them and use just what I can find in the law, which is that the amortization is to be calculated over a 40-year period, starting in 2017, though. Section 8309a:
I also found [Final Management Advisory Report – Estimates of Postal Service Liability for Retiree Health Care Benefits (Report Number ESS-MA-09-001(R))]](http://www.uspsoig.gov/foia_files/ess-ma-09-001r.pdf), a pdf of an official report analyzing the numbers.
I suppose that they could have cooked the numbers to come out with the ones the USPS wanted. But we have to base the discussion on something tangible, so that’s a place to start.
If you look at page 8 of that pdf you linked to, in 2016 the USPS will have an unfunded liability of $26 billion if health care increases 7% per year and a surplus of $13 billion if it only increases by 5%. So if I’m reading that right, it looks like the funding requirement seems to be reasonably close to expected future expenses.
Healthcare costs increased an average of 8.1% from 1980 to 2009. They are currently growing much slower than that but no one know if that will continue or if it will revert to trend.
I was just reading about this yesterday, so I’m glad this thread popped up.
The part I’m really fuzzy on, is what the USPS was doing wrong with its accounting that got Issa all fired up to go after them as part of his anti-government jihad. They were handling healthcare on their own, but then politics happened and that was taken over by a different agency, and the way that agency does things led to Issa forcing them to pre-pay 75 years’ worth of healthcare benefits.
Since then, they’ve undertaken cost-cutting measures etc. and they’re profitable if we don’t count the prepayments. Issa also passed laws handicapping the USPS so they can’t adapt to the changing market, for instance by forbidding them from engaging in modern e-commerce type services their competitors use.
It sounds to me as if the USPS can survive these onerous prepayments for the ten years, it would be just fine. On top of that, they have lots of plans for improving, but they can’t do anything while Issa holds the leash. Or noose, perhaps.
So, loosen up on the prepayments, maybe extend them out longer or at least give them a one year’s postponement or something, and give them the same operational freedom other companies enjoy.
On another note, how does the ACA affect the USPS’s health plans?