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View Diary: USPS is OK: stop the rethug wreckers (63 comments)

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  •  Umm..No. (33+ / 0-)

    This is why we can't have nice things.

    From 2011

    The Postal Service said that its Federal Employees Retirement System is overfunded by $6.9 billion. The prepayments, though required by Congress, are unnecessary, according to the Postal Service.

    The Postal Service said it is suspending its biweekly payments of $115 million into the benefit portion of the Federal Employees Retirement System. The Postal Service said that suspending these payments will save about $800 million in the current fiscal year, which ends Sept. 30.

    The next due date for biweekly payments is this Friday, June 24. Partenheimer said the suspension of required payments was a short-term solution "so that we have enough cash at the end of the year to pay our employees and suppliers, and keep the mail moving."

    Ever since a 2006 act of Congress, the Postal Service has been required to prepay $5.5 billion per year into the fund. But the service's financial situation has become increasingly desperate in recent years, so the organization has been looking for ways to cut costs.

    "It's a burden that's really impossible for the Postal Service to maintain," said Ruth Goldway, chairwoman of the Postal Regulatory Commission, in an interview prior to the suspension of payments.

    Cutting Saturday service is the least we can do? Do you have any idea how ignorant that makes you sound of the situation? Let's forget about all those small business owners who do the majority of their mailing on Saturday. Let's just stop their ability to do business and curtail Etsy, Ebay, Amazon, and freelance crafters who can't go to the post office on a weekday.

    How hard is it to understand that they would be turning a profit if they did not have to contribute into their retirement system for people who have not even been born yet?

    President Obama would have been a republican in the 1980's & 1990's. Go figure.

    by Tool on Mon Mar 18, 2013 at 07:36:08 AM PDT

    [ Parent ]

    •  Thank you! (9+ / 0-)

      So many people are completely blind to what the real problem is. It's nice to see someone who gets it. :-)

      •  What makes you think that Tool is correct that (1+ / 0-)
        Recommended by:
        johnny wurster

        the USPS is profitable if you remove the pre-funding of retirement requirement?  How is your position going to change when you find out you are in error?

        For my part, if I'm in error I won't emphatically say that cutting Saturday is a no brainer.  But if you look at reality based coverage of this (and not misleading politically driven coverage) then you would understand that the USPS ran a huge deficit last year on top of the "losses" they incurred from pre-funding their retirement costs.

        We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

        by theotherside on Mon Mar 18, 2013 at 08:21:44 AM PDT

        [ Parent ]

        •  this (11+ / 0-)

          From Bernie

          Washington, DC (Feb. 13, 2010)—In light of first quarter financial reports that the U.S. Postal Service would have generated $200 million in profits had it not been required to pre-fund its future retiree health benefits, Senator Bernie Sanders and Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, called for the passage of legislation to reform this burdensome requirement, which no other federal agency or private sector company faces.

          “At a time when the Postal Service faces enormous financial challenges, we have got to end the absurd requirement that it pay over $5.5 billion every year to pre-fund future retiree health benefits,” Sanders said. “No other entity in the United States of America is burdened with this mandate, and with $44 billion in this future retiree account earning 3.5 to 4 percent interest every year, it can be fully funded in the next 21 years without the need for additional funds.  By correcting this inequity, and through other commonsense reforms, the Postal Service will have the money it needs over the short term without resorting to the draconian cuts in service it has proposed. Over the long term, the Postal Service will need to develop a new and aggressive entrepreneurial business model to bring in the revenue it needs in the 21st Century.”

          “The latest numbers show that the Postal Service would be in the black but for this extraordinary prefunding requirement,” said Cummings. “Congress should pass comprehensive legislation to eliminate this unfair burden, immediately improve the Postal Service’s cash position, and enable it to develop innovative products that meet changing market needs.”

          Financial data released by the Postal Service reveal that it would have made profits of $200 million in the first quarter of this fiscal year had it not been required to account for approximately $3 billion of its pending fiscal years 2011 and 2012 retiree health benefits prefunding payment and non-cash adjustments to its Workers’ Compensation Liabilities.

          President Obama would have been a republican in the 1980's & 1990's. Go figure.

          by Tool on Mon Mar 18, 2013 at 08:31:03 AM PDT

          [ Parent ]

        •  I posted a little lower down (5+ / 0-)
          Recommended by:
          elwior, Tool, patbahn, JohnnySacks, glorificus

          in this thread explaining that I think the USPS should be given a fair opportunity to show profitability by removing the problem that the 2006 legislation caused.

          That is all I will say about this since I basically agree with Tool's responses in this section of the thread.

    •  Did you read his comment? (2+ / 0-)
      Recommended by:
      cryonaut, johnny wurster

      Here's a source from CNN Money:

      http://money.cnn.com/...

      In FY 2012, the USPS lost $11.1 billion on account of the retirement obligations.  It lost $15.9 billion total.  It would still be an unprofitable venture even if it was not for the retirement law and it is in a declining industry.  The article picks Q4 2012 and glibly ignores that even in a quarter in which the USPS had more business because of the election and Christmas it barely turned a profit.

      •  Thanks for that link (0+ / 0-)

        Here's another link which draws the same general conclusion that the USPS is running billion dollar deficits.

        http://blogs.reuters.com/...

        In this Reuter's article they come up with roughly the same loss ($16 billion) but attribute only $6 billion to pre-funding while your CNN article states that about $11 billion of the loss was attributable to pre-funding.  That is a huge difference.  I don't know which is correct but it would be nice to find out.

        Regardless, cutting Saturday service is estimated to only save $2 billion a year and so under either scenario the USPS would still be losing billions per year.

        We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

        by theotherside on Mon Mar 18, 2013 at 08:29:42 AM PDT

        [ Parent ]

    •  Tool, (2+ / 0-)
      Recommended by:
      johnny wurster, VClib

      You are trying to personalize this argument by calling me ignorant which isn't particularly cool.  So let's try to stick with debating facts.

      You said:  "How hard is it to understand that they would be turning a profit if they did not have to contribute into their retirement system for people who have not even been born yet?"  

      I said that the USPS is running a $10 billion deficit even if you do NOT count the pre-funding requirement.  

      These statements are mutually exclusive.  I have a pretty reliable news source that indicates that I'm correct and I'll post it soon (it's easily found if you want to look for it on the internet).  You can go ahead and post your proof as a response to this comment.

      But more importantly, hypothetically speaking, what is going to be your response IF you find out I'm right?  Are you going to re-examine your position on making reasonable cuts to service?

      We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

      by theotherside on Mon Mar 18, 2013 at 08:17:54 AM PDT

      [ Parent ]

      •  Theotherside, (6+ / 0-)

        If you took offense to my comment - I'm am sorry.

        Now - If I find out you are right and the USPS is running a $10 billion deficit even if you do NOT count the pre-funding requirement I will not re-examine my position on making reasonable cuts to service.

        Why?

        We continue to subsidize private industries in agriculture, energy and travel to the tune of billions per year. Many of those subsidies are unnecessary, wasteful and are only given at the behest of powerful monied interests.

        The postal service however serve all of the country - from the rich to the poor and helps people facilitate the American dream by being able to effectively deliver their goods for a low cost. We have Etsy, Ebay, Amazon, and thousands of internet startup's that rely on being able to send their goods cheaply across the country. It is more profitable in the long term for the country to subsidize the postal service (if it fails to turn a profit) then to arbitrarily say AUSTERITY NOW! We must cut hours now because someday somehow we may experience that dreaded deficit monster.

        Sending something by FED-EX or other private carriers costs far more and would drive a ton of people out of business. In fact most conservatives have been using this manufactured crisis to not only argue that saturdays should be cut - but that the entire postal service should be restructured and placed in the hands of private corporations. How did that work out for our education system? Or our telecommunication systems? Or our security systems?

        I would argue that expanding hours on the weekday & weekends would be an investment in small business and allow them to do more business.

        Before we start cutting days of service lets do the following:

        1. Repeal the 2006 law.

        2. Have an audit.

        3. Expand hours and hire more workers.

        If all those things are done then maybe - just maybe I will agree with you to cut hours if they prove ineffective. But as of now the most obvious and simplest solutions have no been tried. Austerity is seldom the answer - and when it is - it is only when the country is economically strong.

        President Obama would have been a republican in the 1980's & 1990's. Go figure.

        by Tool on Mon Mar 18, 2013 at 08:55:08 AM PDT

        [ Parent ]

        •  "if you are right" (1+ / 0-)
          Recommended by:
          sneakers563

          He's right.  Just look at their financial statements.  You can see the losses for yourself.

        •  I understand what you are saying (2+ / 0-)
          Recommended by:
          VClib, patbahn

          and BTW most people will actually take offense if you say in a comment "Do you have any idea how ignorant that makes you sound of the situation?"  But I appreciate the apology.

          As for your suggestions:

          1)  Repeal the 2006 law.  I may support that but I don't know the rationale behind implementing the law in the first place.  If the USPS was planning on relying on the government to pay for the retirement benefits in the future, then I can understand the desire to require pre-funding.  Now, that may or may not be part of the rationale.  I just don't know.  But would you repeal the law if it specifically stated that under no circumstances would the federal government pay for the retirement benefits of the USPS employees?

          2)  Have an audit.  The results for FY11 were released in April 2012 and so I'm guessing that you will have a comprehensive audited financial report detailing the losses due to operations and those due to the pre-funding requirement in about a month.  But you have been provided  links from either Reuters or CNN that list the USPS deficit at about $16 billion and they both clearly state that only a portion of the deficit is due to pre-funding retirements (although the exact amount is not clear).

          3) Expand hours and hire more workers.  This I simply don't understand.  It would only increase the losses.  Are there actually lines at the Post Office right before closing?  Are those people actually turned away?  There would seem not to be any evidence to support this conclusion but I'm open to new sources of data.

          Anyway, it's tiring arguing over the USPS in purely ideological terms.  For those that understand how much demand has been destroyed by modern technology, that understand that this is leading to substantial operating deficits that are likely to only get worse as volumes decline further, and that want to address the long term solvency of the USPS then it is imperative to take a good hard look at the data and determine how to make it a sustainable operation.

          Cutting Saturday is the least worst place to start and that is why the USPS proposed it.  But that is not nearly sufficient to make it balance it's books in either the short, medium or long run.

          We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

          by theotherside on Mon Mar 18, 2013 at 09:55:58 AM PDT

          [ Parent ]

          •  pre-funding (2+ / 0-)
            Recommended by:
            Tool, Dark UltraValia

            75 years of future pensions in five years is the key. I know of no enterprise, public or private, with this kind of budgetary mandate.

            Do you? Examples?

            This was a feature, not a bug, of the Bush Regime to destroy the public postal service and turn over the mail to the tender mercies of the marketplace; FedEx, DHL etc.

            You cool with that?

            Wurster is, obviously.

            The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

            by ozsea1 on Mon Mar 18, 2013 at 12:16:04 PM PDT

            [ Parent ]

    •  You're both right in some respects (2+ / 0-)
      Recommended by:
      VClib, nextstep

      The FERS fund is overfunded, and USPS has had gigantic operating losses (ie, putting aside the prefunding expense) in the past few years.

      How hard is it to understand that they would be turning a profit if they did not have to contribute into their retirement system for people who have not even been born yet?
      This is false in two ways.  If you look at the financials, they'd still have huge losses even if they didn't have to contribute into their health & retirement systems.  Also, the health & retirement payments do not cover people that haven't been born yet.  It's for current employees and retirees.
      •  That is not true! (4+ / 0-)
        Recommended by:
        elwior, myboo, Tool, Cassandra Waites

        2006 Congressional mandate put on the US Postal Service contained in the “Postal Accountability and Enhancement Act of 2006” to pre-fund healthcare benefits of future retirees, a 75 year liability over a 10 year period. No other agency or corporation is required to do this. This provision costs the Postal Service $5.5 billion a year.

        •  Like I said, it covers current and future (5+ / 0-)
          Recommended by:
          theotherside, VClib, dunsel, nextstep, BYw

          retirees.  The origin of the urban legend re: "employees that haven't been born yet" is from the fact that, if someone starts at USPS at, say, 21, they could still be drawing retirement benefits in 75 years.  That was then twisted via internet telephone into the program covering people that haven't been born yet.

          Here's the GAO:

          “Contrary to some claims, there is no [retiree health benefits] liability held, nor contributions made for any future employees who have yet to be hired or yet to be born.” Instead, about half of the $94 billion liability is for retired postal annuitants and their survivors, while the other half is for current career postal employees.
          http://oversight.house.gov/...
    •  I think the proposal includes keeping the (4+ / 0-)
      Recommended by:
      Dark UltraValia, elwior, BYw, Tool

      actual Post Offices open on Saturday, but no home delivery. Mail would be accepted and processed on Saturday, but like business offices, there would be no delivery to homes.

      "let's talk about that"

      by VClib on Mon Mar 18, 2013 at 10:34:29 AM PDT

      [ Parent ]

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