Please Mr. Postman
August 2, 2012 10:14 am
By Yvonne Lee
The United States Postal Service defaulted yesterday for the first time on a $5.5 billion payment to the US Treasury to cover future retiree health costs. Next month, it will do the same when another $5.6 billion is due absent legislation enacted by Congress. What does this all mean for one of the few government agencies that can trace its roots prior to the Declaration of Independence (and is explicitly authorized by the Constitution)?
For the time being, very little.
In a statement released earlier this week, USPS stated:
“We will fully fund our operations, including our obligation to provide universal postal services to the American people. We will continue to deliver the mail, pay our employees and suppliers and meet other financial obligations. Postal Service retirees and employees will also continue to receive their health benefits. Our customers can be confident in the continued regular operations of the Postal Service.”
It’s no secret that the Internet, the recession and private carriers like UPS and FedEx have severely cut into USPS revenues. Back in December, it announced that it would eliminate 28,000 jobs and close half of its processing centers in order to avoid bankruptcy. What is less evident is why the Postal Service is burdened with yearly payments toward pre-fund retiree healthcare a full 75 years ahead of time — a requirement unique to the agency.
Enter 2006′s HR 6407, or the Postal Accountability and Enhancement Act. Sponsored by Representative Tom Davis (R – VA) and signed by President George W. Bush, the act was intended to “reform the postal laws of the United States.” It obligated the Postal Service to pre-fund 75 years’ worth of future health care benefit payments to retirees with payments to the US Treasury. These payments were calculated to be $5.5 billion dollars annually.
The USPS does not directly receive taxpayer dollars — with the exception of subsidies for costs associated with the disabled and overseas voters — and “relies on the sale of postage, products and services to fund its operations,” which have steadily decreased in the advent of email and social media. This first default is hardly shocking to those keeping track of the agency.
While some news outlets like Slate and the conservative National Review Online are decrying the current agency as hopelessly old fashioned and desperately in need of “free market” competition, other sources (Esquire, Democracy Now! and the Left Labor Reporter) are criticizing this so-called “financial crisis” as having been manufactured by privatization supporters.
Meanwhile, ABC News reports that the 112th Congress has “produced 151 laws, 17 percent of which have been to rename post offices” — but nothing in the way of postal reform or an amendment to Congressional mandates that would be unique to the agency.
Two bills have recently been directed toward postal reform: One, HR 2309, is sponsored by Rep. Darrell Issa (R – CA) who is the chair of the congressional committee overseeing USPS and, according to AllGov.com, the recipient of “more than $35,000 in campaign contributions from PACs and individuals associated with USPS competitor United Parcel Service.” HR2309 would end Saturday delivery, close thousands of rural POs, shut down hundreds of processing centers, and create a commission to break union contracts.
The other, HR 1351, is sponsored by Rep. Stephen Lynch (D – MA). It mandates the US Treasury to credit USPS for the more than $13 billion it has overpaid to its pension plan, allowing the agency to meet its immediate obligations. In addition, it maintains overnight delivery standards and Saturday delivery, while creating a commission to develop “ways for the Postal Service to become more entrepreneurial as it adjusts to mail volume changes caused by e-mail and the Internet,” according to Sen. Bernie Sanders, a co-sponsor of the bill.
(Three guesses as to which bill will move forward . . . hmmm.)
It remains to be seen what will happen to the Postal Service. Nonetheless, there is something inherently sad about the possibility of the only delivery service that reaches every address in the nation — no matter how remote or financially insolvent — shuttering its doors one day. According to the agency’s 2012 Postal Facts, USPS employs over half a million workers and would rank 35th in the Fortune 500 if it were a private sector company. Black Enterprise and Hispanic Business magazines rank it a leader in workforce diversity.
Image from here